Annual report
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Essity Aktiebolag (publ) Annual Report 2024 Essity is a global, leading hygiene and health company. Every day our brands care for the hygiene and health of a billion people across 150 countries. The cover image shows our offering in the Professional Hygiene business area which sells, among other products, paper hand towels, soap and dispensers under the world-leading Tork brand.
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The Annual Report 2024 for Essity Aktiebolag (publ) has been submitted by the Board of Directors and describes the company’s overall objectives and strategies and earnings for the year. The aim is to describe the business from an economic, social and environmental perspective. The Board of Directors’ Report and financial statements are presented on pages 9–11, 25–99 and 104–186 and include the auditor’s report. Essity’s sustainability statements has been prepared in accordance with GRI Reporting Standards. Pages 47–99 encompass Essity’s statutory sustainability statements pursuant to the requirements stated in the Annual Accounts Act. The official Annual Report 2024 is prepared in Swedish in European Single Electronic Format (ESEF). Refer to essity.com to access Essity’s financial reports. The Annual Report is also pub- lished as a PDF in Swedish and English. These have not been prepared according to ESEF and thus do not constitute official versions. The English version is a translation of the Swedish original. All files were submitted for publication on March 3, 2025. Essity’s three business areas are active in a growing, global hygiene and health market with leading market positions and strong brands. Read more on page 28. Business areas Contents Health & Medical Consumer Goods Professional Hygiene The Board of Directors’ Report and financial statements Introduction Invest in Essity 3 The year at a glance 4 CEO’s message 6 The Essity share The share 9 Information to shareholders 11 Strategy External environment and market 12 Strategy for value creation 15 Targets and outcomes 25 Business areas Health & Medical 29 Consumer Goods 31 Professional Hygiene 33 Group Operations and structure 35 Acquisitions, investments and divestments 36 Financial overview 37 Other Group information 40 Risks and risk management 41 Sustainability statements General disclosures 48 Environmental disclosures 62 Social disclosures 83 Governance disclosures 97 Statutory Sustainability report and GRI index 100 Auditor’s Combined Assurance Report 103 Corporate governance report Corporate governance 104 Board of Directors and Auditors 110 Executive Management Team 112 Financial statements including notes Contents 114 Financial statements, Group 116 Financial notes, Group 123 Financial statements, Parent company 174 Financial notes, Parent company 176 Proposed disposition of earnings 182 Auditor’s report 183 Other information Description of costs and Raw materials 187 Production facilities 188 Financial multi-year summary 189 Calendar and contact points 191 20% of net sales 2024 54% of net sales 2024 26% of net sales 2024 Contents 2Essity | Annual R eport 2024Introduction | Contents Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Essity is a global, leading hygiene and health company with the purpose to break barriers to well-being. Every day, we improve the hygiene and health of one billion people in 150 countries. Essity’s value creation is based on a number of factors that make us unique and could be of interest to those who are considering an investment in Essity or are already shareholders: Globally leading in attractive and growing hygiene and health market Leading in the attractive and growing global hygiene and health market with solutions used by people around the world every day. Growth is driven by market trends such as a growing and aging population, higher living standards and greater awareness of hygiene and health. Leading market positions based on strong brands and successful innovations Strong brands and innovative customer and consumer offerings. Positioned as number 1 or 2 in 90% of branded sales and the global market leader with the Tork and TENA brands. Value-creating strategy and proven execution Restructuring of the product portfolio and production structure have yielded a strong platform for growth. The new financial targets presented in 2024 are to achieve annual organic sales growth of >3% and an EBITA margin excl. IAC of >15%. Well-posi- tioned for continued profitable growth with the strategy to grow in the product segments with the highest return and the fastest growing sales channels, and to increase the company’s presence in North America and Latin America. A winning corporate culture with a focus on results, care and collaboration. Sustainability at the core To lead in sustainability is a priority for long-term profitable growth. Group targets include science-based climate targets with the ambition to achieve net zero emissions by 2050. Essity’s sustainability work has received recognition, for example, through inclusion in the Dow Jones Sustainability Index and an AAA score in MSCI’s ESG rating. Named Diversity Leader by the Financial Times. Strong financial position Strong financial position with good and stable cash flow generation. Long-term stable and rising dividends that increased 43% in 2018–20244), with attractive EPS growth of more than 50% over the same period. The share buyback program was launched in 2024 with the ambition to use this as a recurring part of Essity’s capital allocation. Net sales, SEKbn EBITA excl. IAC, SEKbn5) ® 1) Including holdings of treasury shares. 2) Relates to average number of part-time and full-time employees during the year and calculated as an average over five quarters. Employees, approximately2) 36,000 Market capitalization, December 31, 20241) 208 SEKbn Proposed dividend per share, SEK4) 8.25 Earnings per share, SEK3) 19.29 Invest in Essity Brands: 2024202320222021202020192018 102.0 109.6 102.2 101.5 131.3 147.1 145.5 +43% 2024202320222021202020192018 11.8 13.9 14.7 11.5 12.0 18.9 20.3 +72% 3) Earnings per share for continuing operations. excl. IAC and amortization of acquisition-related intangible assets. 4) Board of Directors’ dividend proposal. 5) 2018–2020 excluding Vinda’s published figures. In 2021–2023, Vinda was classified as discontinued operations. Contents 3Essity | Annual Report 2024Introduction | Invest in Essity Introduction Invest in Essity The year at a glance CEO’s message The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Successful innovation Innovation is crucial to achieving product superiority, improving people’s well-being and contributing to a more sustainable and circular society. During the year, Essity launched a new toilet paper system, Tork Optiserve Coreless, upgraded its range of incontinence products with TENA Proskin Pants for faster absorption and better skin care, improved Libero diapers with softer leg pads and, in wound care, improved Cutimed Sorbion dressings to make them easier and more comfortable to apply. The year at a glance Successful year with highest profit so far Essity reported net sales in 2024 of SEK 146bn and its highest-ever profit of SEK 20.3bn, corresponding to a margin of 14%. Profit was positively impacted by higher volumes, a better product mix and lower cost of goods sold. Divestment of holding in Vinda Essity divested its holding of 51.59% of shares in the Asian hygiene company Vinda for HKD 23.50 per share. The sales proceeds amounted to about HKD 14.6bn (approxi- mately SEK 19bn). The divestment reduces Consumer Tissue’s share of net sales, entailing a shift for Essity toward a product portfolio with a higher margin and lower volatility. Essity will retain a presence in Asia and in Vinda through continued licensing of Essity’s brands. New financial targets On June 17, new financial targets were presented: • Annual organic sales growth >3% • EBITA margin excl. IAC of >15% The targets are an increase in ambition with an emphasis on profitable growth and are based on the company’s robust platform with leading positions in growing and attractive markets. Further steps toward net zero emissions Essity’s target to achieve net zero emissions of greenhouse gases by 2050 was validated by the Science Based Targets initiative. The company’s near-term targets for Scopes 1 and 2 are to achieve a reduction of 35% by 2030, and the near-term target in Scope 3 was updated from a reduction of 18% to 35% within the same timeframe. All targets are relative to a 2016 baseline. Share buyback program A SEK 3bn share buyback program of Class B shares in Essity began on June 17. The program will extend until the 2025 Annual General Meeting. The repurchased shares are expected to be canceled. The share repurchase will be financed using cash flow from current operations after the ordinary dividend with the ambition to continue with share buybacks over time as a recurring part of Essity’s capital allocation. Contents 4Essity | Annual Report 2024 Recognition for sustainability initiatives During the year, Essity received several awards, for example, it was named one of the world’s 100 most sustainable companies by Corporate Knights and included in S&P Global’s Sustainability Yearbook 2025. Essity also entered into a partnership with the World Economic Forum (WEF). As a member of the WEF’s Global Alliance for Women’s Health, Essity is adopting the role of lead partner in menstrual health and leading the Alliance’s work to measure and close the gaps in this area. Examples of awards: Introduction | The year at a glance Introduction Invest in Essity The year at a glance CEO’s message The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Key figures EBITA excl. IAC, SEKm 20,344 EBITA margin excl. IAC +14.0% Operating cash flow, SEKm 17,242 ROCE excl. IAC +17.6% Net sales, SEKm 145,546 Organic sales growth +0.2% Net sales by distribution channel Retail trade, 54% Business-to-business, 26% Healthcare sector, 20% Net sales by region Europe, 60% North America, 17% Latin America, 17% Asia, 2% Other, 4% Net sales by business area Health & Medical, 20% Consumer Goods, 54% Professional Hygiene, 26% EBITA excl. IAC by business area Health & Medical, 25% Consumer Goods, 44% Professional Hygiene, 31% Net sales by category Incontinence Products Health Care, 12% Medical Solutions, 8% Incontinence Products Retail, 8% Feminine Care, 9% Baby Care, 5% Consumer Tissue, 32% Professional Hygiene, 26% USA, 14% Germany, 12% UK, 8% Mexico, 8% France, 8% Spain, 6% Group’s ten largest markets, % of net sales Netherlands, 4% Colombia, 3% Italy, 3% Canada, 3% Other, 31% Emerging markets accounted for 26% of net sales. Contents 5Essity | Annual Report 2024Introduction | The year at a glance Introduction Invest in Essity The year at a glance CEO’s message The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Magnus Groth President and CEO “ Our efforts to accelerate profitable growth have yielded results, and we grew strongly during the year in several of our most profitable categories and gained market shares. The full-year profit was the highest ever for Essity.” Contents 6Essity | Annual Report 2024Introduction | CEO’s message Introduction Invest in Essity The year at a glance CEO’s message The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Essity is in better shape than ever and based on the profitable platform we have created over several years of working on structural improvements, we launched new, more ambitious financial targets during the year. We also launched a share buyback program. Our efforts to accelerate profitable growth have yielded results, and we grew strongly during the year in several of our most profitable categories and gained market shares. Sales for the year amounted to SEK 146bn and profit reached its highest level ever at SEK 20.3bn. Hygiene and health prioritized Demand has been good, despite the continued global economic challenges. People are priori- tizing hygiene and health and choosing the product offerings that can best improve their everyday lives, making relevant innovation crucial. Our launches of, for example, inconti- nence products for better absorption and skin health, TENA Proskin Pants, and skin-friendly and easy-to-use wound dressings, Cutimed Sorbion, are examples of innovations that have contrib- uted to our favorable performance. Our latest innovation is a new toilet paper system, Tork Optiserve Coreless, which complements our popular Tork PeakServe paper towel dispenser. Through innovations and investments in sales and marketing, we have strengthened the leading market positions of our brands and gained market shares in 2024. Attractive product portfolio and new targets The divestment of the Asian hygiene company Vinda was finalized during the year, entailing a tangible shift for Essity toward a product port- folio with a higher margin and lower volatility. We presented new and higher financial targets to grow organically by more than 3% per year, with a margin of more than 15%. We also launched an SEK 3bn share buyback program, funded by the strong cash flow from operations after ordinary dividend. The aim is to make the buyback of shares a recurring part of Essity’s capital allocation. Volume growth and highest-ever profit During the year, we strived to combine good margins with accelerated growth. Our efforts have paid off and growth increased over the year. Highest growth was noted in our most profitable categories: Incontinence Products, in both the healthcare sector and the retail trade, Medical Solutions, Feminine Care and, excluding restructuring, Professional Hygiene. Full-year profit was the highest to date for Essity of just over SEK 20bn, corresponding to a margin of 14%. Looking back over the last six quarters, we have established a new level of profitability for the company of around SEK 5bn per quarter. Earnings per share for the year increased 27%, cash flow was strong and the financial position is stable. For the 2024 fiscal year, the Board of Directors proposes an increase in the dividend of 6.5% to SEK 8.25 per share. A successful year Contents 7Essity | Annual Report 2024Introduction | CEO’s message Introduction Invest in Essity The year at a glance CEO’s message The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Better for customers, consumers and Essity Every day, Essity improves the hygiene and health of one billion people in 150 countries. We strive to reach even more people and to improve quality of life for consumers, patients, care- givers and customers worldwide. Actively working with social and environmental sustainability contributes to higher profit- ability and growth. The company’s greenhouse gas emission reductions for Scope 1, 2 och 3 science-based climate targets are aligned with our plan to reach the target of –35% by 2030 compared with 2016. Our sustainability efforts continue to gain recognition. Essity is included in the Dow Jones Sustainability Index and was once again ranked as one of the world’s top 100 most sustainable companies by Corporate Knights. Essity was recognized a Diversity Leader by the Financial Times for the fourth consecutive year. “ Every day, Essity improves the hygiene and health of one billion people in 150 coun- tries. We strive to reach even more people and to improve quality of life for consumers, patients, caregivers and customers.” Leaving as CEO After 14 years with the company and ten years as President and CEO, I have decided to leave Essity during 2025. It has been an interesting, intense and enjoyable time during which I, together with fantastic colleagues, have created and devel- oped Essity. An Essity that today is leading in the growing global hygiene and health market with strong brands and market positions, a winning corporate culture and robust finan- cial position. Until my successor is in place, I will continue with full speed to develop the company to achieve our targets and vision to be the undisputed global leader in hygiene and health. Magnus Groth President and CEO Contents 8Essity | Annual Report 2024Introduction | CEO’s message In September, Essity’s Board of Directors visited Latin America to meet employees and customers and to visit production facilities. This provided the Board with an overview of operations in the region and an insight into local initiatives from Essity’s three business areas. Introduction Invest in Essity The year at a glance CEO’s message The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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/percent.tabSEK /zero.tab /five.tab /one.tab/zero.tab /one.tab/five.tab /two.tab/zero.tab 2024202320222021 7.0 0 12.27 7. 2 57.93 7.7 5 13.60 8.252) 19.291) /zero.tab/period.tab/zero.tab /one.tab/period.tab/five.tab /three.tab/period.tab/zero.tab /four.tab/period.tab/five.tab /six.tab/period.tab/zero.tab /seven.tab/period.tab/five.tab 70 80 90 100 110 120 130 DecNovOctSepAugJulJunMayAprMarFebJan Index Contents 9Essity | Annual Report 2024 The share The Essity share is quoted on Nasdaq Stockholm Main Market and the market capitalization was SEK 208bn1) at December 31, 2024. Share price performance 2024 In 2024, the price of Essity’s Class B share increased 18%. The OMX Stockholm 30 Index rose 4% and the Peer Group Index2) was unchanged. The closing price of Essity’s Class B share at year-end was SEK 295.70. The highest closing price for Essity’s Class B share during the year was SEK 324.30, which was noted on September 16, 2024. The lowest closing price was SEK 236.80 on January 25, 2024. The total shareholder return for Essity’s Class B share for the year was 22%. The total shareholder return for the OMX Stockholm 30 Index was 7% and for the Peer Group Index 3%. Dividend Policy Essity aims to provide long-term stable and rising dividends to its shareholders. When cash flow from current operations exceeds what the company can invest in profitable expansion over the long-term, and under the condition that the capital structure target is met, the surplus could be distributed to the shareholders. Index On Nasdaq Stockholm, Essity is included in the OMX Stockholm 30 Index, OMX Nordic 40 Index and OMX Nordic Consumer Staples Index. In addition to indexes directly linked to Nasdaq Stockholm, Essity is included in other indexes, such as the FTSE All World Index and the MSCI Household Products Index within Consumer Staples. Essity is also represented in sustainability indexes such as the Dow Jones Sustainability Index, OMX Stockholm 30 ESG Responsible Index and FTSE4Good Europe, and has the highest MSCI ESG rating of AAA. Share trading3) In 2024, approximately 323 million Essity shares were traded on Nasdaq Stockholm, corresponding to a value of approximately SEK 90.2bn. Average daily trading for Essity on Nasdaq Stockholm amounted to approximately 1.3 million shares, corresponding to a value of approximately SEK 360m. During the year, trading on CBOE had a turnover of approximately 696 million Essity shares, on LSE Group approximately 240 million shares and other trading venues approximately 78 million shares. Shareholder structure 49% of the share capital is owned by investors registered in Sweden and 51% by foreign investors. The USA, Norway and the UK account for the highest percentage of shareholders registered outside Sweden. Share structure Essity’s share capital comprises two share classes, Class A shares and Class B shares. Every Class A share carries entitlement to ten votes and every Class B share to one vote. Class A and Class B shares confer the same entitlement to receive dividends. Both share classes are listed on Nasdaq Stockholm Main Market and are part of the Large cap segment. Buyback program On June 17, 2024, Essity commenced a SEK 3bn share buyback program that will extend until the 2025 Annual General Meeting. In 2024, Essity repurchased 7,398,000 own Class B shares for a total value of SEK 2,224m. Aa of December 31, 2024, treasury shares represent SEK 24,783,300m (1.1%) of the total share capital based on a quotient value of SEK 3.35. The repurchased shares are expected to be canceled. The share repurchase will be financed using cash flow from current operations after the ordinary dividend with the ambi- tion to continue with share buybacks over time as a recurring part of Essity’s capital allocation. Beta coefficient The beta coefficient for Essity’s Class B share was 0.18 in 2024. A beta coefficient of less than 1 indicates that the share is less sensitive to market fluctuations than average. Shareholder communication and share analysts Information about the company is available at essity.com/investors/ in the form of reports, presentations and financial data together with a current list of analysts that cover Essity. Earnings, dividend and dividend yield Total shareholder return 2024 Earnings per share, 20241) 19.29SEK Proposed dividend per share, 20242) 8.25 SEK Earnings per share3), SEK Dividend per share, SEK Dividend yield, % Essity B Peer Group4) OMX Stockholm 30 1) Earnings per share for continuing operations. excl. IAC and amortization of acquisition-related intangible assets. Earnings per share for total operations were impacted positively by the capital gain from the divestment of the holding in Vinda and amounted to SEK 29.83. 2) Board of Directors’ dividend proposal. 3) Total operations. 4) Peer Group comprises a selection of competing companies in Essity’s busi- ness areas of Health & Medical, Consumer Goods and Professional Hygiene. 1) Including holdings of treasury shares. 2) Peer Group comprises a selection of competing companies in Essity’s business areas of Health & Medical, Consumer Goods and Professional Hygiene. 3) Data compiled by Modular Finance. The Essity share | The share Introduction The Essity share The share Information to shareholders Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Data per share All performance measures include items affecting comparability (IAC) unless otherwise stated. SEK per share unless otherwise indicated 2024 2023 Earnings per share before and after dilution1) 29.83 13.60 Earnings per share excl. IAC2) 3) 19.29 17.56 Average price during the year 280.80 271.72 Closing price, December 31 295.70 250.00 Cash flow from current operations 13.54 16.55 Cash flow from operating activities2) 24.52 27.16 Dividend4) 8.25 7.75 Dividend yield, % 2.8 3.1 P/E ratio5) 10 18 P/E ratio, excl. IAC5) 15 14 Price/EBITA6) 12 14 Price/EBITA excl. IAC6) 12 12 Beta coefficient7) 0.18 0.28 Pay-out ratio, % 28 57 Equity 127 113 Number of registered shares, December 31 (millions) 702.3 702.3 Number of shares outstanding, December 31 (millions)8) 694.9 702.3 Average number of shares before and after dilution, (millions)8) 700.3 702.3 1) Total operations. 2) Continuing operations. 3) Excluding amortization of acquisition-related intangible assets. 4) Board of Directors’ dividend proposal. 5) Share price at year-end divided by earnings per share. 6) Market capitalization plus net debt plus non-controlling interests divided by EBITA (EBITA = operating profit before amortization of acquisition-related intangible assets). 7) Share price volatility compared with the entire stock exchange. 8) Excluding treasury holding. Shareholder structure Holding No. of shareholders No. of shares Capital (%) Votes (%) 1–1,000 90,218 18,547,772 2.6 3.0 1,001–10,000 12,931 35,012,870 5.0 5.7 10,001–20,000 640 9,034,832 1.3 1.3 20,001– 789 639,747,015 91.1 89.9 Total 104,578 702,342,489 100.0 100.0 Source: Euroclear, December 30, 2024. Ticker names Nasdaq Stockholm ESSITY A, ESSITY B Bloomberg ESSITYA:SS, ESSITYB:SS REUTERS ESSITYa.ST, ESSITYb.ST Essity’s largest shareholders At December 30, 2024, the following companies, foundations and mutual funds were the ten largest registered shareholders based on voting rights: Shareholders Votes (%) Holding (%) AB Industrivärden 29.8 10.5 Norges Bank Investment Management 7.4 5.7 AMF Insurance and Funds 6.1 1.3 Swedbank Robur Funds 2.5 4.5 Blackrock 2.1 3.8 Vangard Funds 2.0 3.5 Skandia 1.9 0.8 T. Rowe Price Funds 1.8 3.2 Handelsbanken Fonder 1.7 2.9 Carnegie Fonder 1.2 2.1 Other owners 43.5 61.7 Total 100.0 100.0 Of which treasury holding 0.6 1.0 Source: Euroclear, December 30, 2024. Sweden, 49% USA, 23% UK, 7% Norway, 7% Luxembourg, 5% Other countries, 9% Total foreign ownership, 51% Source: Euroclear, December 30, 2024. Share capital development The table below shows the development of the company’s share capital since 2017. Year Event Change in number of Class A shares Change in number of Class B shares Total number of Class A shares Total number of Class B shares Total number of shares Change in share capital, SEK Total share capital, SEK Quotient value, SEK 2017 Bonus issue1) 64,589,523 637,747,966 64,594,523 637,747,966 702,342,489 2,349,866,980 2,350,366,980 3.35 2017 Conversion –454,085 454,085 64,140,438 638,202,051 702,342,489 – 2,350,366,980 3.35 2018 Conversion –147,667 147,667 63,992,771 638,349,718 702,342,489 – 2,350,366,980 3.35 2019 Conversion –58,129 58,129 63,934,642 638,407,847 702,342,489 – 2,350,366,980 3.35 2020 Conversion –2,199,470 2,199,470 61,735,172 640,607,317 702,342,489 – 2,350,366,980 3.35 2021 Conversion –320,104 320,104 61,415,068 640,927,421 702,342,489 – 2,350,366,980 3.35 2022 Conversion –206,154 206,154 61,208,914 641,133,575 702,342,489 – 2,350,366,980 3.35 2023 Conversion –231,033 231,033 60,977,881 641,364,608 702,342,489 – 2,350,366,980 3.35 2024 Conversion –1,004,227 1,004,227 59,973,654 642,368,835 702,342,489 – 2,350,366,980 3.35 1) At the Annual General Meeting, held on April 5, 2017, shareholders resolved on a bonus issue. The purpose of the bonus issue was to increase the share capital and number of shares so they would correspond to the number of shares in SCA ahead of SCA’s distribution of Essity. Share distribution Class A Class B Total Number of registered shares 59,973,654 642,368,835 702,342,489 Of which treasury holding 7,398,000 7,398,000 In 2024, 1,004,227 Class A shares were converted to Class B shares at the request of shareholders. The total number of votes in the company subsequently amounted to 1,242,105,375. Source: Euroclear, December 30, 2024. Ownership by country Contents 10Essity | Annual Report 2024The Essity share | The share Introduction The Essity share The share Information to shareholders Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Information to shareholders Annual General Meeting The Annual General Meeting will be held on Thursday, March 27, 2025 at 2:00 p.m. at Stockholm Waterfront Congress Centre, Nils Ericsons Plan 4, Stockholm (registration from 1:00 p.m.). The shareholders also have the opportunity to exercise their voting rights by voting in advance (so-called postal voting) ahead of the Annual General Meeting. Shareholders may thereby choose to exercise their voting rights at the Annual General Meeting 2025 by attending in person, through a proxy or by advance voting as instructed below. Notice convening the Annual General Meeting can be found on essity.com. A. Right to participate at the Meeting Shareholders who wish to participate in the Annual General Meeting must • be listed as a shareholder in the presentation of the share register prepared by Euroclear Sweden AB as of Wednesday, March 19, 2025; and • give notice of their intention to participate in the Meeting in accordance with the instructions set out in section “B. Notice of participation at the meeting venue in person or by proxy” no later than Friday, March 21, 2025, or by submitting its advance vote in accordance with the instructions under section “C. Advance voting” no later than Friday, March 21, 2025. For shareholders who have their shares registered through a bank or other nominee, the following applies in order to be entitled to participate in the Meeting. In addition to giving notice of participa- tion, such shareholder must re-register its shares in its own name so that the shareholder is listed in the presentation of the share register as of the record date Wednesday, March 19, 2025. Such re-registra- tion may be temporary (so-called voting rights registration), and request for such voting rights registration shall be made to the nominee in accordance with the nominee’s routines, at such a time in advance as decided by the nominee. Voting rights registration that has been made by the nominee no later than Friday, March 21, 2025, will be considered in the presentation of the share register. B. Notice of participation at the meeting venue in person or by proxy A person who wishes to participate at the meeting venue in person or by proxy must give notice to the company according to the following instructions: • by telephone at +46 8 402 90 80, weekdays between 9:00 a.m. and 4:00 p.m. • by mail to Essity Aktiebolag (publ), “Annual General Meeting”, c/o Euroclear Sweden AB, P.O. Box 191, SE-101 23 Stockholm, Sweden • via Euroclear Sweden AB’s website https://anmalan.vpc.se/euroclearproxy • by email to GeneralMeetingService@euroclear.com Name, personal identity number/corporate registration number, address and telephone number, and number of accompanying persons (no more than two), if any, should be stated when noti- fication is given. Shareholders represented by proxy shall issue a written and dated proxy for their representative signed by the shareholder. A proxy is valid one (1) year from its issue date or such longer period as set out in the proxy, however not more than five (5) years. Proxy forms are available upon request and on essity.com. Anyone representing a legal entity must present a copy of the regis- tration certificate or equivalent authorization document, not older than one (1) year, listing the authorized signatories. To facilitate registration at the Meeting, the proxy as well as the registration certificate and other authorization document should be sent to the company at the address stated above well in advance of the Meeting and no later than Friday, March 21, 2025. C. Advance voting Shareholders may exercise their voting rights at the Annual General Meeting by voting in advance, so-called postal voting. A person who wishes to attend the meeting venue in person or by proxy must however give notice in accordance with the instructions under section “B. Notice of participation at the meeting venue in person or by proxy” above. This means that a notice of participation only through advance voting is not sufficient for shareholders who wish to attend the meeting venue. A special form must be used for the advance vote. The form is available on essity.com. Submission of the form in accordance with the instructions set out below is considered as notice of participa- tion in the Annual General Meeting. The completed form must be received by Euroclear Sweden AB no later than Friday, March 21, 2025. The completed form may be sent to Essity Aktiebolag (publ), “Annual General Meeting”, c/o Euroclear Sweden AB, P.O. Box 191, SE-101 23 Stockholm, Sweden. A completed form may also be submitted electronically. Electronic submission can be made either through verification with BankID in accordance with instructions at https://anmalan.vpc. se/euroclearproxy, or by sending the completed form by email to GeneralMeetingService@euroclear.com. Electronic submission must be made no later than Friday, March 21, 2025. Shareholders may not provide specific instructions or conditions to the advance vote. If so, the entire advance vote is invalid. Further instructions and conditions can be found in the advance voting form. Shareholders submitting their advance vote by proxy must issue a written and dated proxy for their representative signed by the share- holder, which must be enclosed with the advance voting form. A proxy is valid one (1) year from its issue date or such longer period as set out in the proxy, however not more than five (5) years. Proxy forms are available upon request and on essity.com. If the share- holder is a legal entity, a registration certificate or equivalent authori- zation document, not older than one (1) year, listing the authorized signatories shall be appended to the advance voting form. Nomination Committee • Helena Stjernholm, AB Industrivärden, the Chairman of the Nomination Committee • Anders Hansson, AMF and AMF Funds • Marianne Nilsson, Swedbank Robur Funds • Anders Jonsson, Livförsäkringsbolaget Skandia • Jan Gurander, Chairman of the Board of Essity The Nomination Committee prepares, among other things, the proposal for election of Board members. For further information, refer to the Corporate governance report on pages 104–113. Dividend The Board of Directors proposes a dividend of SEK 8.25 per share, an increase of 6.5% compared with the preceding year, and that the record date for the dividend be Monday, March 31, 2025. The divi- dend represents a dividend yield of 2.8%, based on Essity’s share price at the end of the year. Payment through Euroclear Sweden AB is expected to be made on Thursday, April 3, 2025. For Essity’s financial calendar 2025–2026 and other information, see page 191. Contents 11Essity | Annual Report 2024The Essity share | Information to shareholders Introduction The Essity share The share Information to shareholders Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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External environment Essity continuously analyses its external environment to identify opportunities, risks and drivers for profitable growth. Several trends within areas such as demographics, hygiene and health, sustainability and digitalization provide favorable conditions for good growth in the global hygiene and health market. Advances in connectivity, along with the commoditization of data, are offering oppor- tunities for value creation. At the same time, consumer touchpoints are expanding through various digital platforms and channels. Essity is leveraging digitalization across the value chain and adopting new technologies where these create value for customers and consumers while increasing business performance. We adopt new technologies such as generative artificial intelligence (Gen AI) to enhance business performance in distinct focus areas. Essity has established an AI council and is investing in AI literacy training to ensure ongoing innovation and regulatory compliance. Awareness of hygiene and health has increased following the COVID-19 pandemic, with the emphasis on preventive measures and self-care, such as good hand hygiene and cleaning proce- dures at home and in public spaces. Meanwhile, antimicrobial resistance (AMR) is a growing threat, with the WHO highlighting its global health and economic implications. Demand for hygiene solutions is driven by improved access to health services in emerging markets and increased preventive spending in mature countries. Self-care is increasingly important in health promotion and disease prevention, which is reflected in consumer behaviors and product offerings. Essity’s portfolio encompasses a broad range of superior hygiene and health products, solutions and services for medical care, self-care and preventive care. A growing global population and rising life expectancy are increasing demand for hygiene and health products. For example, a growing elderly population is increasing the demand for care, with the rising prevalence of incontinence and chronic conditions such as wounds, and leading to a widening care gap. Healthcare systems are facing more pressure and demand for new solutions. Younger generations, particularly Generation Z (1997–2012) but also Generation Alpha (2013–2024), are increasingly important consumer groups. Generation Z values authenticity and ethics. Generation Alpha is entering the period care market, as menarche typically takes place between the ages of 10 and 16. Like Generation Z, they are digital natives, active on social media. Essity targets all age groups to meet the needs for innovative hygiene and health solutions at all stages of life. Interest in and the importance of environmental and social sustainability issues such as climate change, human rights, and equality are increas- ing. In 2024, awareness of the significance of nature conservation, protection of biodiversity, and water conservation grew. To safeguard human rights and achieve gender equality, a focus on diversity, equity and inclusion is required. Envi- ronmental and social sustainability is a strategic priority for Essity to ensure future growth and competitiveness, reduce risks, and contribute to a better world. Essity’s products promote healthier, more dignified lives, while the company reduces its environmental impact through climate actions, circularity and sustainable innovations, respect- ing ecosystems and biodiversity, and aiming for net zero emissions by 2050. Demographics Sustainability Hygiene and health Digitalization Contents 12Essity | Annual Report 2024Strategy | External environment and market Introduction The Essity share Strategy External environment and market Strategy for value creation Targets and outcomes Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Europe, 41% North America, 37% Asia, 9% Latin America, 6% Other, 7% Europe, 61% Latin America, 21% North America, 14% Other, 4% North America, 45% Europe, 31% Latin America, 9% Other, 15% 740 SEKbn ˜2–3% Asia 15 SEKbn ˜3–4% Europe 375 SEKbn ˜1–2% Latin America 105 SEKbn ˜2–3% Other 45 SEKbn ˜4–5% North America 200 SEKbn ˜2–3% Essity’s hygiene and health market Growth potential in different regions The penetration and use of hygiene and health products, solutions and services vary between regions – from relatively high in mature markets to relatively low in emerging markets. For example, consumption of inconti- nence products in Latin America is only about one fourth of that in Western Europe, and tissue consumption in Eastern Europe is only about one third of that in Western Europe. Several trends are driving the increased demand in emerging markets, including achievement of higher living standards, urbanization-induced expansion of retail trade and e-com- merce, heightened awareness of hygiene and health, and greater access to medical care. Essity aims to grow and defend leading market positions in mature markets and capitalize on growth opportunities in emerging markets. Essity’s global hygiene and health market amounted to approxi- mately SEK 540bn in mature markets and to approximately SEK 200bn in emerging markets in 2024. Essity’ s global hygiene and health market Health & Medical Read more on page 29. Read more on page 31. Read more on page 33. Consumer Goods Professional Hygiene Source: The information has been compiled by Essity for presentation purposes based on external market sources and internal estimates covering categories and markets where Essity is present (some category and regional exclusions are applied). = Expected annual market growth, CAGR (Compound Annual Growth Rate) 2024–2030 Essity’s global hygiene and health market 2024 Contents 13Essity | Annual Report 2024Strategy | External environment and market Introduction The Essity share Strategy External environment and market Strategy for value creation Targets and outcomes Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Essity’ s market positions Use Global Europe North America Latin America Professional Hygiene 1 1 2 1 Incontinence Products 1 1 5 1 Medical Solutions1) 2 1 8 2 Consumer Tissue 3 1 – 3 Feminine Care 5 3 – 1 Baby Care 5 2 – – ® Source: The information has been compiled by Essity for presentation purposes based on external market sources and internal estimates covering all markets in the listed categories. 0 100 200 300 400 500 600 0 500 1,000 1,500 2,000 2,500 3,000 0 100 200 300 400 0 10 20 30 40 Contents 14Essity | Annual Report 2024Strategy | External environment and market Incontinence Products Number per person with incontinence/ year Baby Care Number per child up to the age of 2.5 years/year Feminine Care Number per woman aged 15–49 years/ year Tissue Kg per capita/year Source: The information has been compiled by Essity for presentation purposes based on external market sources and internal estimates covering all markets in the listed categories. 1) Consolidated position which includes the product segments Wound care, Compression Therapy and Orthopedics. North America Western Europe Eastern Europe Latin America Asia Introduction The Essity share Strategy External environment and market Strategy for value creation Targets and outcomes Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Breaking barriers to well-being Value for our stakeholders • Enable more people every day to enjoy a fuller life • Contribute to a more sustainable and circular society • Generate increased shareholder value through profitable growth Value creation for our stakeholders – Essity’s strategic framework Strategy Business areas Group targets Vision To be the undisputed global leader in hygiene and health Mission Develop, supply and sell superior hygiene and health products, solutions and services Where to play: How to win: • Health & Medical • Consumer Goods • Professional Hygiene Profitable and sustainable growth • Annual organic sales growth of >3% • EBITA Margin excl. IAC >15% • Solid investment grade rating • Long-term stable and rising dividends • Sustainability includes, among other things, science-based targets with the ambition to achieve net zero emissions by 2050 and that all production waste should be subject to material or energy recovery by 2030 Read more on pages 25–27. Read more on pages 28–34. Purpose Vision and mission Read more on page 16. Read more on page 19. Read more on page 20. Read more on page 21. Read more on page 22. Read more on page 23. Read more on page 17. Read more on page 18. Essity is leading in the hygiene and health market, which benefits from trends such as an increasing and aging population, higher living standards, and greater awareness of hygiene and health. Contents 15Essity | Annual Report 2024 15 Channel OperationsInnovation Sustainability Category People & culture Geography Brand building Strategy | Strategy for value creation Introduction The Essity share Strategy External environment and market Strategy for value creation Targets and outcomes Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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TENA SmartCare Change Indicator was updated in 2024 for improved usability. We focus on hygiene and health categories where product performance and brand preference matter. Hygiene and health are the essence of well-being. Our portfolio of hygiene and health products, solutions and services plays an essential role in improving well-being for the benefit of consumers, patients, caregivers and customers across the globe, and for the benefit of society and the planet. Essity enables supe- rior hygiene outcomes and experiences – at home and away from home – by supporting the effectiveness and efficiency of hygiene routines, and by preventing, treating and monitoring health condi- tions. Across our businesses, we are led by consumer insights and superior product performance to meet the needs and expecta- tions of consumers, patients, caregivers and customers. Profitable growth opportunities We continue to develop our portfolio toward higher margins, focusing our expansion on areas where we can scale our core capabilities and gain the right to win. We tap into expanding markets where favorable trends fuel profitable growth oppor- tunities. Essity’s key priority is to leverage, grow and strengthen our core business while enabling profitable expansion into new categories and business models with high growth potential, low capital intensity and high yields. Channel Category Geographic Where to play Category choices In 2024, Essity nurtured its profitable core businesses across all categories. For example, Essity expanded its offering in Profes- sional Hygiene tissue dispenser systems, strengthened the leader- ship position of the TENA brand in Incontinence and grew profit- able in Feminine Care. In the Baby Care and Consumer Tissue categories, Essity aims to outperform market growth in selected markets. Additionally, we are expanding our leading portfolio of brands, from disposable hygiene to leakproof reusable apparel for menstrual and incontinence care, complemented by intimate soaps and wipes. Essity has also enhanced its digital solutions for caregivers and healthcare facilities. TENA SmartCare Change Indicator was updated in 2024 for improved usability. It now features a one-size sensor strip that can be used on all absorbent product sizes. In addition, a new design allows for better accuracy and for multiple users per sensor. Clinical studies and real-world evidence have confirmed the health economic benefits of these solutions. Furthermore, Essity is exploring and testing new avenues for future growth, such as developing a menopause offering. Value-creating acquisitions Acquisitions have played a crucial role in building the Essity we have today, and they continue to be a way to broaden the com - pany’s categories and strengthen the product portfolio and geographical presence. We have identified growth opportunities through acquisitions in all business areas, primarily within the categories of Medical Solutions, Incontinence Products, Feminine Care, and Professional Hygiene. For example, in Medical Solutions, we focus mainly on advanced wound care and compression therapy, while in Professional Hygiene, we prioritize areas such as soap, disinfectants, wiping and cleaning. Contents 16Essity | Annual Report 2024Strategy | Strategy for value creation Introduction The Essity share Strategy External environment and market Strategy for value creation | Where to play How to win Targets and outcomes Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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We strive for growing positions in North America, Latin America and East Asia, while strengthening and growing our European presence. Essity sees global growth opportunities in all its three business areas and across product categories and market combinations. Growth is prioritized where Essity already holds strong market positions and where these are supported by favorable market trends. Our strong market positions in Europe offer a solid base for scale and further expansion. In addition, North America represents a significant growth opportunity across all three business areas. Over time, Essity strives to increase the company’s share of sales and earnings in emerging markets, mainly in Asia and Latin America, where consumption of hygiene and health products, solutions and services is lower than in mature markets. Europe Essity’s European hygiene and health market amounts to approxi- mately 375 billion SEK, with expected growth of approximately 1–2% between 2024 and 2030. A key priority for Europe is to defend Essity’s strong leading market positions and to grow in key markets through differentiation and innovation, and by extending the portfolio in adjacent categories. North America Essity’s hygiene and health market in North America amounts to approximately 200 billion SEK, with expected growth of approxi- mately 2–3% between 2024 and 2030. Essity has a market pres- ence across all three business areas and is a market leader in leak- proof apparel with the Knix brand. Over the past number of years, we completed acquisitions in all business areas to strengthen the portfolio of products and brands, and our aim is to continue and accelerate our profitable growth journey. Where to play Geographic choices Channel Category Geographic Latin America Essity’s Latin American hygiene and health market amounts to approximately 105 billion SEK, with expected growth of approxi- mately 2–3% between 2024 and 2030. Essity is present in several categories across all three business areas in many Latin American countries. Essity has strong brands and market positions in Latin America, with leading positions in the Consumer Goods catego- ries of Feminine Care and Incontinence Products. Additionally, Essity is growing its Health & Medical and Professional Hygiene business areas. The region offers opportunities for further profit- able growth based on increasing penetration levels across catego- ries and increasing per-capita consumption levels. Essity aims to continue expanding its footprint across the region. Asia Essity’s Asian hygiene and health market amounts to approximately 15 billion SEK, with expected growth of approximately 3–4% between 2024 and 2030. This will be driven by population growth, higher living standards and rising disposable incomes. In 2024, Essity completed the divestment of its 51.59% holding in the Asian hygiene company Vinda. Essity retains a presence in Asia through continued licensing of Essity’s brands to Vinda as through the Health & Medical business that is not a part of the Vinda collabora- tion. Asia accounts for 2% of Essity’s net sales, primarily in Health & Medical. Essity remains committed to its long-term goal of devel- oping a strong presence in Asia across all three business areas. Other regions Essity is present in all categories across all three business areas in Australasia. In the Middle East and Africa, Essity maintains a selec- tive presence through direct sales or distribution agreements and have successfully established strongholds in several categories. For instance, Libero is a leading brand of baby diapers in Kuwait. Essity continuously evaluates expansion opportunities where synergies and profitable growth can be achieved.Growth is prioritized where Essity already holds strong market positions and where these are supported by favorable market trends. Contents 17Essity | Annual Report 2024Strategy | Strategy for value creation Introduction The Essity share Strategy External environment and market Strategy for value creation | Where to play How to win Targets and outcomes Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Presence in channels for relevant target groups We aim to have a presence across all relevant online and offline channels where consumers, patients, caregivers and customers can be found. By delivering superior experiences through an effec- tive go-to-market model and best-in-class service, we strive to build strong relationships with our customers and consumers. Essity’s products, solutions and services are distributed through the retail trade, distributors, pharmacies, hospitals and e-commerce. Investing in e-commerce to benefit customers and consumers Digitalization is changing the way we market and sell our products, solutions and services and how we build relationships with consumers, patients, caregivers and customers. Essity continues to build its channel presence by complementing traditional offline distribution channels with digital channels. Through digital inter- action, we gain a better understanding of buyer and user needs, and it allows us to communicate and engage with them more effectively. The direct-to-customer and direct-to-consumer models present an opportunity to enhance shopper awareness and engagement, attract new customers and consumers, and nurture the relation- ship with existing ones while strengthening brand loyalty. Essity continues to expand its digital presence particularly in period care and incontinence as well as in Professional Hygiene. For example, Essity’s period care brands have developed digital activities on social media platforms such as TikTok to reach and educate young Where to play Channel choices Channel Category Geographic To reach an audience experiencing puberty, Libresse published the digital guide “Befriend Your Body” which covers menstruation, puberty and emotional upheavals. girls about puberty and menstruation. In Brazil, Essity pioneered the country’s first web shop for incontinence products, bolstering sales across other retail channels and ultimately establishing Essity as the market leader in the country. In Professional Hygiene, we are creating a more consumer-like experience for our business- to-business (B2B) customers through a holistic and personalized digital platform with relevant and timely content. Furthermore, B2B customers are placing increasingly high expectations on how we interact with them across different channels. Essity has imp - lemented several programs to enhance the B2B customer experi- ence, such as enhancing the Tork web shop to improve the experience for our distribution partners across markets. Essity also has a strong presence on the e-commerce platforms of retailers and distributors. We want to be present in all relevant channels for consumers, patients, caregivers and customers. Essity’s products, solutions and services are distributed through the retail trade, distributors, pharmacies, hospitals and e-commerce. Contents 18Essity | Annual Report 2024Strategy | Strategy for value creation Introduction The Essity share Strategy External environment and market Strategy for value creation | Where to play How to win Targets and outcomes Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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A company culture where both people and business thrive. A culture where people thrive Our diverse workforce and inclusive culture are a competitive advantage. We are convinced that good leadership is fundamental to create a strong culture and high employee engagement, and to achieve world-class results. The employee experience is regularly followed up in our MyVoice engagement survey. We strive to excel in driving performance, developing both the business and our people. Our leaders support innovation, development and team- work through constructive feedback and coaching. Expectations on leaders are defined in Essity’s Leadership Platform, which serves as the basis for our leadership assessment and develop- ment. Essity provides a portfolio of leadership programs that are delivered globally to ensure excellence in leadership fundamen- tals and to build capabilities for the future. Essity’s commitment in diversity, equity and inclusion (DEI) is specified in the Group’s targets for gender distribution at management levels. In addition, we are committed to offering an inclusive work environment for all employees, and to accelerating representation for underrepre- sented groups. Attracting, recruiting and growing talent Essity attracts, recruits and develops the talent of today for the Essity of tomorrow. We are recognized as an attractive employer, focusing on communicating our employer offering to employees, and on building relationships with future talent. We reward employees using a Total Reward approach, which entails a mixture of monetary and non-monetary components. We offer market-competitive remuneration comprising salary, variable remuneration, pension and other benefits. Essity follows local salary structures and respects internationally established rules for minimum wages and reasonable compensation. The variable themselves. Employees engage in regular dialogues with their line manager to define goals and concrete activities to develop in their current roles and toward their next career step. The Essity Univer- sity offers trainings and development formats for our employees to ensure we develop the capabilities required for a future-fit organi- zation. A special emphasis is placed on leadership capabilities as well as functional capabilities such as marketing and manu- facturing, provided through academies. During the year, we continued to establish new academies and develop existing ones. An inclusive, safe and healthy workplace We are dedicated to promoting sustainability and well-being for our employees, customers and society. Our workplaces should be safe, attractive and inclusive, and support a positive employee experience. Essity aims to have a zero-incident and healthy working culture, where we actively promote employees’ physical, mental and social well-being, for a sustainable work life. “I Care” is our global excellence program aimed at creating a safe and healthy work environment. During 2024, we launched the Global Employee Assistance Program for all employees and their house- holds to provide them with support when facing challenges in life. We also continued to realize our DEI plans and embed them in our people practices. Read more on pages 83–90. How to win People and culture remuneration programs cover most employees at Essity. Our workplace philosophy offers a work environment with attractive offices and flexibility, as well as Group-wide health and safety programs. To provide a consistent employee experience, we launched a global onboarding program in 2024 to enable new employees to effectively onboard to Essity. Learning as part of everyday work We focus on growing talent from within with a healthy talent flow across functions and organizations. The continuous development of employees and leaders is crucial for Essity’s long-term success and its opportunity to attract and retain the right talent and skills. Learning and development are fundamental parts of our employees’ everyday life and take place through practical experi- ence, training and interactions with colleagues. We drive the development of talent and individual development plans based on business requirements, personal strengths and identified develop- ment areas. Our aim is that everyone will learn as they work and that leaders will prioritize development for their employees and Beliefs We collaborate across teams, functions and businesses We have the courage to take the lead We care for our customers, consumers, the environment and each other We are committed to delivering superior results Essity’s Beliefs & Behaviors Innovation Operations Sustainability Brand building People & culture Breaking barriers to Well-being Innovate for Good Excel Together Be You with us Essity’s Employer Value Proposition Contents 19Essity | Annual Report 2024Strategy | Strategy for value creation Introduction The Essity share Strategy External environment and market Strategy for value creation Where to play | How to win Targets and outcomes Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Purposeful brands with leading brand equity for improved well-being. Strong market positions Essity has a strong portfolio of leading purposeful brands with significant brand equity. Our goal is to achieve category leader- ship, securing the number one or two branded market positions across our portfolio. Essity holds the number one or number two position in approximately 90% of branded sales. A high proportion of branded sales demonstrates product superiority and customer preference in terms of the product characteristics, brand and price. In 2024, these accounted for 64% of Essity’s branded sales. digital channels, we enhance the value of our marketing invest- ments. Together with product innovation, this creates strong, purposeful and appreciated brands. Essity has launched several important brand building campaigns and initiatives, for example: • JOBST’s campaign “Defy Gravity” raises awareness about condi- tions such as lipedema, lymphedema and venous disorders that can often be stigmatized or misunderstood. The campaign features individuals with these conditions participating in synchronized swimming to highlight their strength and resil- ience and to show that – with the right support and mindset – people can defy what holds them down and achieve their goals. • TENA’s campaign “Use Less, Use Better” aims to improve conti- nence care through efficiency and sustainability. The campaign focuses on providing high-quality products that enhance care for individuals with incontinence and reduce waste. • Libresse’s campaign “It’s never just a period” destigmatizes menstruation and highlights the complexities and realities of women+’s experiences with their periods. The campaign emphasizes that menstruation is not just a simple biological process but involves a range of physical and emotional experi- ences that are often misunderstood or overlooked. • One in three Americans face barriers when washing their hands in public washrooms. Tork launched the initiative #inclusive- hygiene, using printed paper towels as a medium for a “paper towel plea”, revealing these often invisible barriers and advocating to make public restrooms more inclusive. How to win Leading brands Building winning strong brands Essity’s brand-building emphasize being distinctive, superior, visible and consistent. Superior brands are perceived as better than other brands, fostering an affinity, while distinctive brands stand out as unique and trendsetting. Visible brands maintain top-of-mind awareness, and consistent brands ensure a uniform experience, reinforcing reliability and trustworthiness. Our diverse range of products, solutions and services are focused on breaking barriers to well-being and elevating stan- dards in hygiene and health. Through our marketing campaigns, we address and remove hygiene and health-related taboos and stigmas. By engaging with customers and consumers through Essity has launched several important brand building campaigns and initiatives, for example from the brands JOBST, TENA, Libresse and Tork. Innovation Operations Sustainability Brand building People & culture Contents 20Essity | Annual Report 2024Strategy | Strategy for value creation Introduction The Essity share Strategy External environment and market Strategy for value creation Where to play | How to win Targets and outcomes Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Bringing insight-based innovations to market that drive growth. Continuous innovation Continuous innovation is crucial to achieving product superiority, strengthening brand associations and generating commercial value while steadily improving people’s well-being and contrib- uting to a more sustainable and circular society. We primarily invest in categories with the highest return, where the greatest value can be created. Innovations that drive growth Essity is committed to maximizing the impact of innovation by focusing on fewer, bigger and better innovations, leveraging its global presence and economies of scale in combination with its speed to market. Essity aims to deliver a noticeably superior and sustainable user experience, centered on customer and consumer insights to drive profitable growth and strengthen market posi- tions. We also strive for innovation, beyond products, in marketing, business models, technology and processes. How to win Innovation leadership Sustainable innovations that improves everyday life Innovation at Essity focuses on sustainable innovations that increase hygiene and health outcomes and experiences and reduce the company’s environmental impact, all while yielding profitable growth. Our target is that at least 50% of Essity’s innova- tions are to generate social and/or environmental improvements annually. In 2024, the outcome was 87%. Examples of important innovations through the year During 2024, Essity launched several innovations across all three business areas. In Health & Medical the new TENA ProSkin incontinence pants with FeelDry Advanced™ that absorb twice as fast and are drier for longer was launched. The improved flexibility of our advanced wound care product Cutimed® Sorbion® allows for comfortable adaptation of the product to difficult wound and body contours, making it easier and more comfortable to apply. We continuously work with improving our packaging and launched a new design for JOBST compression stockings to assist consumers in choosing the right product. In Consumer Goods, Essity continued to raise the standard and improve the customer offering in incontinence with the new TENA Silhouette Pants, offering the most underwear-like pant yet with an improved body-close fit, comfort and a more discreet design. In Mexico, fossil free-plastic day towels, night towels and daily liners was launched in Feminine Care under the market-leading Saba brand, resulting in a lower climate impact. In Professional Hygiene, an upgrade of the Tork Xpressnap® Café dispenser in Latin America reduces napkin consumption and refill time. Tork also continues to build on its unique compression technology for paper hand towels with a new range of compressed multifold hand towels which doubles the capacity of a small dispenser and save space in both transportation and storage. During 2024, Essity launched several innovations across all three business areas. For example, improved flexibility of advanced wound care products, an upgraded dispenser for napkins and fossil free-plastic day towels, night towels and daily liners. Innovation Operations Sustainability Brand building People & culture Contents 21Essity | Annual Report 2024Strategy | Strategy for value creation Introduction The Essity share Strategy External environment and market Strategy for value creation Where to play | How to win Targets and outcomes Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Driving operational efficiency through agility and continuous improvement. We address operational efficiency across the entire business, from research and development (R&D), marketing and sales to Essity’s end-to-end customer-centric supply chain. This encompasses demand planning, procurement, technology, manufacturing and product delivery. We achieve exceptional efficiency and service excellence through digitalization, with a continuous focus on improvement, cost savings and sustainability. Safety first At Essity, the safety, health and well-being of our employees are our highest priorities. Through our “I Care” framework, with its innovative tools and methodologies, a culture that empowers all Essity employees to come home from work safe and healthy every day is maintained. In 2024, Essity made significant improvements in the National Safety Council’s (NSC) Employee Safety Perception Survey. We demonstrated substantial progress showcasing our commitment to creating a safe work environment. We track prog- ress in total recordable injury (TRI) reduction as one of our Group targets. The target is to reduce the TRI frequency by 75% by 2025 compared to 2019. The outcome for 2024 was a decrease of 66%. Read more on pages 83–89. Suppliers Essity is committed to supporting sustainable development across the end-to-end supply chain. We provide products and solutions to our customers and consumers that are made and delivered with respect for people and nature. To facilitate this, we are committed to sourcing from suppliers that share our values. In this regard, we have a specific focus on supplier value creation, which involves scouting for opportunities with existing and potential suppliers to develop solutions and create opportunities to reduce our carbon footprint while ensuring a resilient and cost-efficient supply chain. How to win Operational leadership This also includes optimizing logistics and distribution, imple- menting digital solutions and breakthrough technologies that can lead to significant efficiency improvements, and reducing waste and energy consumption. Manufacturing Excellence Within the framework of Manufacturing Excellence, Essity works with continuous improvements through its focus on people, process innovation, efficiency, quality and sustainability. This drives employee involvement and increases productivity and is our way of delivering breakthrough results in manufacturing, focusing on capability development of our teams, for example, through equipment ownership. Sustainability in our supply chain We also strive to reduce waste, logistics and distribution costs, increase productivity, and optimize material and energy utiliza- tion. This helps to lower the environmental footprint, ensuring cost savings through optimized production structure, efficiency improvements and digitalization, in addition to raw material and energy savings. These measures facilitate growth without a corre- sponding increase in the pace of investments. During 2024, Essity achieved cost savings of SEK 1,5 bn while we also reduced Scope 1 and 2 carbon emissions by 27% compared to 2016. Supply chain transformation During 2024, we started to leverage the full benefits of Essity’s planning and logistics platforms: • Captured customers and consumers demand signals with inno- vative machine-learning modules. • Shipped across more than 60 countries from our Smart Hubs in Europe and North America, delivering efficiency gains including emission reduction in transportation. • Completed our North America supply planning transformation and continued the program in several European countries. Through a comprehensive customer-centric supply chain that utilizes proven and innovative planning and logistics platforms, competitive advantages are created. This leads to increased resil- ience, improved delivery times, and strengthened relationships with customers and suppliers, resulting in better service for customers and consumers. Digitalization Essity is leveraging digitalization across the value chain and adopting new technologies where these create value for customers and consumers while increasing business performance. Our aim is to optimize and improve internal operations through AI and advanced analytics, and to increase automation and robot- ization of production, distribution, logistics and administration. In 2024, Essity signed the European Artificial Intelligence Pact, reinforcing our commitment to responsible AI development and preparing for the EU AI Act. To meet EU standards for safety, fair- ness and accountability, we established governance structures, adopted transparency measures and promoted AI literacy, all aligned with our AI Ethics Policy. Through the digital transforma- tion program, Essity Way of Winning (EWoW), we now see successful deployment to the first wave of countries. It will provide a critical foundation for harmonized processes and quality data, thereby enabling continuous improvements in analytics and automation. We are investing in analytics tools to understand and improve supply chain performance. Essity’s production facilities monitor more than 50 million data points every hour and by processing this data, we optimize material and energy usage to reduce green- house gas emissions and waste. On critical production lines, we moved to 100% automatic product inspection. In the maintenance area, we are using AI to prevent mechanical unplanned down- time, with a quantified cost avoidance. Our production optimiza- tion tools enable our production facilities to reduce greenhouse gas emissions by adapting process setpoints and monitoring consumption in real time. Innovation Operations Sustainability Brand building People & culture Contents 22Essity | Annual Report 2024Strategy | Strategy for value creation Introduction The Essity share Strategy External environment and market Strategy for value creation Where to play | How to win Targets and outcomes Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Improving well-being for people and the planet. Improving well-being Hygiene and health are essential necessities for physical and mental well-being. While preventing the spread of infectious diseases and bacteria, better hygiene leads to better health and well-being. Our leading solutions reach one billion people every day in 150 countries. We address health challenges and promote inclusivity to enable people to live fuller lives. With growing population, longer life expectancies and global development, health and How to win Sustainability leadership well-being are becoming even more important to empower individuals and benefit society. Climate change is one of the most challenging issues of our time. Rising temperatures, water stress and resource loss affect people and societies across the globe as well as businesses. The long-term well-being of people and societies is dependent on a healthy environment. This is why we aim to reduce our environ- mental impact while meeting the growing demand for hygiene and health products, solutions and services. Essity’s Sustainability Playing Field Essity’s key priorities within social and environmental sustainability are summarized in its Sustainability Playing Field. We are breaking barriers and driving societal change in hygiene and health, focusing on women+’s health, infection prevention and control, hygiene and sanitation and the care economy. We are committed to running a responsible business via DEI, occupational health and safety, product safety, business ethics and human rights. When it comes to minimizing our environmental impact, we focus on reducing our emissions along the entire value chain, and we are committed to a net zero business by 2050. In 2024, Essity’s targets to reach net zero greenhouse gas emissions by 2050 were validated by the Science Based Targets initiative (SBTi), covering all near- and long-term targets across Scope 1, 2 and 3 emissions. We innovate for the future, using responsibly sourced, recycled and alternative fibers, as well as less fossil-based plastics. We aim to reduce post-consumer waste, increase water efficiency at our production facilities and limit water use across the life cycles of our products. During 2024, our social sustainability areas were updated. Some of the updates include: • Courageous Conversations fostering DEI Essity’s Courageous Conversations initiative promotes diversity, equity, and inclusion (DEI) through in-person and virtual discus- sions. In 2024, over 80 conversations engaged more than 4,500 participants. It was recognized as a “global practice” by Catalyst, a leading global DEI organization. Essity also became a member of the Unstereotype Alliance, a UN Women initiative working to offer valuable insights and eliminate harmful stereotypes in media and advertising. • Improved health and safety Essity conducts a safety survey every three years to evaluate its health and safety culture, identifying strengths, opportunities, and gaps. The survey encompasses all employees at Essity’s Sustainability Playing Field Innovation Operations Sustainability Brand building People & culture Contents 23Essity | Annual Report 2024Strategy | Strategy for value creation Introduction The Essity share Strategy External environment and market Strategy for value creation Where to play | How to win Targets and outcomes Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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manufacturing sites. In 2024, the second edition saw a response rate increase from 67% to 73%, with the overall score rising from 54.9 to 66.8 out of 100, indicating positive progress. • Women+’s health and menstrual health As part of Essity’s social sustainability efforts, we advocate for improvement in hygiene and health together with other private and public stakeholders and civil society. This includes menstrual health, which encompasses the complete physical, mental and social well-being related to the menstrual cycle – from the first to the last period, from menarche to menopause. • Closing the menstrual health gap We see investing in menstrual health as integral to gender equality and as a basic human right and believe that improvements in the area can unlock progress across the Sustainable Development Goals. In our commitment to closing the menstrual health gap, we have established new partnerships to jointly drive systemic change. Breakthrough technologies in tissue making A majority of Essity’s direct greenhouse gas emissions (Scope 1 and 2) stem from our tissue production, which is energy and water- intense. Essity is pioneering and investing in new breakthrough technologies for tissue making to reduce energy consumption and associated emissions as well as water use. For example, we have launched an industrial pilot line in Germany, in partnership with the global technology company Voith, to produce tissue with 40% less energy and up to 95% less water. In August 2024, Voith and Essity received funding to push this project further. Another example is Essity’s wheat straw pulp mill in Mannheim, Germany, that has been operational for three years. This breakthrough technology enables us to produce and use wheat straw pulp, reducing the environ- mental footprint by 20% compared to fresh wood or recycled fiber. We continuously focus on improving and transforming existing process lines. We have programs in place, referred to as M-Save and E-Save, to increase material and energy efficiency across tissue sites. Fossil-based energy is replaced with renewable energy using a site-by-site approach. For example, our Lilla Edet factory in Sweden runs on biogas, while geothermal steam is used in Kawerau, New Zealand. The infrastructure to switch to hydrogen has been implemented at our site in Kostheim, Germany, and we showcased carbon-neutral hydrogen-based tissue production in a pilot project. We are currently preparing to switch our French sites to biomass in 2025. Another aim of ours is to continuously improve water efficiency in our tissue-making processes. All our sites were recently analyzed using the WWF water risk filter tool to identify the production facili- ties located in water-stressed regions to drive focused and impactful action. Essity has set water reduction targets for eight tissue production facilities and aim to reduce freshwater intake (m3) by 25% by 2032 compared to a 2022 baseline. Alignment to new disclosure requirements From 2025 and onwards, Essity will report under new disclosure requirements, the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS). Essity has already begun preparing to comply with the reporting and the sustainability statements on page 47 provides more information on Essity’s material sustainability matters. Innovation Operations Sustainability Brand building People & culture As part of our social sustainability efforts, we strive to break taboos around menstrual health by educating teenagers about menstruation and available products. Contents 24Essity | Annual Report 2024Strategy | Strategy for value creation Introduction The Essity share Strategy External environment and market Strategy for value creation Where to play | How to win Targets and outcomes Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Essity creates value for customers, consumers, communities, employees, and shareholders through profitable and sustainable growth. The concept of profitable and sustainable growth has been broken down into a number of Group targets and policies. Annual organic sales growth1) Target: Outcome 2024: >3% 0.2% Dividend Policy Target: Outcome 2024: Long-term stable and rising dividends Capital Structure Policy Target: Outcome 2024: Maintain a solid investment grade rating In 2024, organic sales growth amounted to 0.2%, of which volume accounted for 0.5% and price/mix –0.3%. Excluding restructuring and exited contracts, organic sales growth amounted to 1.8%. The Board of Directors proposes an increase in the dividend of 6.5% compared with 2023 to SEK 8.25 per share for the 2024 fiscal year. Read the dividend policy in its entirety on page 9. Net debt amounted to SEK 30,769m. Net debt in relation to EBITDA excl. IAC was 1.16. EBITA margin excl. IAC1) Target: Outcome 2024: >15% 14% In 2024, profit was positively impacted by increased volumes, a positive mix and good price discipline combined with lower cost of goods sold. Solid investment grade rating 8.25 2) SEK Dividend per share, SEK Financial targets and outcomes 1) Financial targets from June 17, 2024. 2) Board of Directors’ dividend proposal. 2024202320222021 1 7.3 % 2.6% 5.8% 0.2% 2024202320222021 9.2% 12.8% 14.0% 11.3% 2024202320222021 7.0 0 7. 2 5 7.7 5 8.252) +17.9% Actimove’s Leukotape® supplies market- leading products suitable for use in sports, by amateurs and laymen, but also by professional athletes. Contents 25Essity | Annual Report 2024Strategy | Targets and outcomes Introduction The Essity share Strategy External environment and market Strategy for value creation Targets and outcomes Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Sustainability targets and outcomes Health and safety Decrease in total recordable incident rate Target 2025 (compared with 2019): Outcome 2024: –75% – 66% The Total recordable injury (TRI) figure includes Lost time accidents (LTA), Restricted work cases (RWC) and Medical treatment cases (MTC). All of Essity’s production facilities are conducting purposeful and systematic work with safety issues. Science-based climate targets Reduction of absolute greenhouse gas emissions Scope 1 and 2, and Scope 3 Target 2030 (compared with 2016): Outcome 2024: Scope 1 and 2 –35% Scope 1 and 2 –27% Scope 3 –35% Scope 3 –21% 1) Essity’s climate-affecting emissions are divided into three different classes (Scope) depending on origin. Scope 1 and 2 are directly linked to Essity’s production. Scope 3 reports indirect emissions in the value chain. Water Reduction of freshwater intake at tissue sites in water-stressed regions Target 2032 (compared with 2022): Outcome 2024: –25% –5% Fresh fiber Share of FSC™- or PEFC-certified fresh fiber Target (annual): Outcome 2024: 100% 99% In 2024, Essity’s target was set to reduce freshwater intake by 25% at eight tissue paper facilities in water-stressed regions by 2032, using 2022 as the baseline. This addresses the water consumption at sites with the highest risk of water stress and focuses on reduction of water intake. Through certifications such as the Forest Stewardship Council™ (FSC™ C003255) and the Programme for the Endorsement of Forest Certification (PEFC/16-33-1406), Essity ensures sustainable fiber sourcing, thereby preventing deforestation and promoting biodiversity. Sustainable innovations Share that yielded social and/or environmental improvements Target (annual): Outcome 2024: >50% 87% Our target for sustainable innovations is that at least 50% of Essity’s innovations will annually yield social and/or environmental improvements. Essity tracks the sales from launched innovations against both social and environmental improvement criteria. Innovations are classified as sustainable if meeting either one or both criteria. Gender distribution at management level Gender distribution on all management levels is to be between 40 and 60% for each respective gender Target (annual): Outcome 2024: 40/60% 34/66% Essity’s target is that gender distribution at all management levels (Executive Management Team, senior management, middle management) is to be within the interval 40/60%, where the majority group based on gender is to constitute no more than 60%. The target is reported at an aggregate outcome level for the three management levels. For the outcome in 2024, 34% were women and 66% were men. 1) Outcome in 2023. Contents 26Essity | Annual Report 2024Strategy | Targets and outcomes Introduction The Essity share Strategy External environment and market Strategy for value creation Targets and outcomes Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Actimove® Ankle Walker is now at least 20% lighter than previous versions and competing products, with increased walking safety thanks to a non-slip sole. Business ethics and Code of Conduct Share of new employees who received training in the Code of Conduct Target (annual): Outcome 2024: 100% 90% The Code of Conduct describes how employees are to act, how the company operates, stakeholder expectations of Essity, and Essity’s commitment to human rights. All wholly owned subsidiaries are bound by the Code of Conduct. Responsible sourcing Share of total purchase cost from suppliers that comply with Essity’s Global Supplier Standard Target 2025: Outcome 2024: 95% 94% Packaging Share of packaging manufactured from renewable and/or recycled material Target 2025: Outcome 2024: 85% 80% Essity has a Global Supplier Standard to ensure responsible business operations and respect for human rights in the company’s supply chain. Essity is striving for 100% recyclability and 85% renewable or recycled material in the company’s packaging. This target applies to both paper and plastic packaging for Essity’s brands. Production waste Subject to material or energy recovery Target 2030: Outcome 2024: 100% 71% Resource efficiency and the reduction of waste are important in Essity’s production facilities. The target is that all production waste will be subject to material and energy recovery by 2030, which reduces greenhouse gas emissions. Contents 27Essity | Annual Report 2024Strategy | Targets and outcomes Introduction The Essity share Strategy External environment and market Strategy for value creation Targets and outcomes Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Our business areas Essity is active in an attractive hygiene and health market with leading market positions and strong brands in the company’s three business areas: Health & Medical, Consumer Goods, and Professional Hygiene. Within the respective business areas’ customer and sales channels, we offer innovative products, solutions, and services for improved well-being of consumers, patients, caregivers and customers, and invest in long-term increased value creation. Health & Medical Read more on page 29. Professional Hygiene Read more on page 33. Consumer Goods Read more on page 31. 20% of net sales 2024 54% of net sales 2024 26% of net sales 2024 Contents 28Essity | Annual Report 2024Business areas | Our business areas Introduction The Essity share Strategy Business areas Our business areas Health & Medical Consumer Goods Professional Hygiene Group Sustainability statements Corporate governance report Financial statements including notes Other information
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In 2024 the new TENA ProSkin incontinence pants with FeelDry Advanced™ that absorb twice as fast and are drier for longer was launched. Holistic health and medical solutions along the continuum of care Health & Medical The Health & Medical business area comprises the categories Incontinence Products Health Care and Medical Solutions. The products and solutions are provided to family carers, profes- sional caregivers, patients, and consumers via pharmacies, medical device stores, hospitals, distributors, care institutions, and e-commerce. Incontinence Products Health Care In Incontinence Products Health Care, under the globally leading brand TENA, Essity offers a broad range of incontinence products, including skincare products, wet wipes, wash gloves, and digital solutions with sensor technology, with sales in the healthcare sector. With the TENA brand, Essity is the global market leader in Incontinence Products Health Care. Essity is the market leader in Europe and Latin America and the third largest player in North America. The TENA brand has its own webshops, developed to help consumers with information about incontinence and available solutions, and to order and have products delivered. Medical Solutions In Medical Solutions, Essity offers products and services in wound care, compression therapy, and orthopedics. Essity is the world’s second largest player and the market leader in Europe in Medical Solutions in the product categories in which the company is active. Wound care In wound care, under the Leukoplast brand, Essity offers a wide range of wound care prod- ucts for the hospital setting, such as surgical tapes, post op dressing, and wide area fixations as well as specialized band aids and other wound care products for minor wounds and scratches in the home environment. Essity also offers prod- ucts for all stages of healing chronic wounds, including, for example, the Sorbact and Sorbion technologies, under the Cutimed and Hydrofera brands. Essity is the fifth largest global player in wound care and a leading player in Europe. Compression therapy In compression therapy, compression garments such as arm sleeves and stockings as well as compression bandages are offered. The prod- ucts are used to manage lymphatic and venous conditions as well as during exercise or for longer trips. With the globally leading brand JOBST, Essity is the largest player in the world in compression therapy, holding the leading posi- tion in North America and number two position in Europe. Orthopedics In orthopedics, solutions are offered for skeletal, muscular, and joint injuries as well as for chronic conditions such as arthritis. Products include, for example, casts, splints, braces support products and athletic tapes. Essity sells orthopedic prod- ucts under the Delta-Cast and Actimove brands and is the third largest player globally. Net sales, SEKm 28,599 Organic sales growth 3.9% EBITA excl. IAC, SEKm 5,509 EBITA margin excl. IAC 19.3% Contents 29Essity | Annual Report 2024Business areas | Health & Medical Introduction The Essity share Strategy Business areas Our business areas Health & Medical Consumer Goods Professional Hygiene Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Net sales Net sales increased organically by 3.9%. Volume growth was good, prices developed positively and the product mix was favorable. Organic growth in Incontinence Products Health Care was good, despite a negative impact from the earlier decision to exit contracts with insufficient profitability. Growth in Incontinence Products was driven by increased volumes, higher sales prices and a positive product mix. The positive mix was largely related to higher sales of TENA pants. Organic growth in Medical Solutions was also good. Volumes increased and sales prices were higher. Sales of wound care products showed a strong trend. EBITA excl. IAC EBITA and EBITA margin excl. IAC increased sharply, mainly due to higher volumes, higher sales prices, a positive mix and lower costs of goods sold. Investments in sales to drive growth increased costs. Currency translation effects had a positive impact on earn- ings of SEK 25m compared with the preceding year. Brands: Change in net sales % 2024 vs 2023 Total 3.1 Volume 2.3 Price/Mix 1.6 Organic growth 3.9 Acquisitions 0.0 Divestments –0.5 Currency translation –0.3 Organic sales growth % 2024 vs 2023 % of net sales Incontinence Products Health Care 3.7 58 Medical Solutions 4.2 42 Europe, 65% North America, 18% Asia, 6% Latin America, 6% Other, 5% Key figures 2024 2023 % Net sales, SEKm 28,599 27,729 3 Organic sales growth, % 3.9 7.0 Gross profit margin excl. IAC, % 44.9 40.3 EBITA excl. IAC, SEKm 5,509 4,037 36 EBITA margin excl. IAC, % 19.3 14.6 ROCE excl. IAC, % 16.3 11.7 Operating cash flow, SEKm 4,859 3,680 32 Investments in non-current assets, net SEKm –923 –931 –1 Average number of employees 8,496 8,544 –1 • Higher volumes • Increased sales prices and favorable product mix • Sharp improvement in EBITA and margin, excl. IAC Net sales EBITA excl. IAC, SEKm EBITA margin excl. IAC, % Net sales, SEKm Organic sales growth, % EBITA excl. IAC Net sales By region Emerging markets accounted for 20% of net sales in Health & Medical. 2024202320222021 21,255 24,708 27,729 28,599 3.9 7.07.2 5.5 2024202320222021 3,800 2,904 4,037 5,509 19.3 14.6 11.8 17.9 Contents 30Essity | Annual Report 2024Business areas | Health & Medical Introduction The Essity share Strategy Business areas Our business areas Health & Medical Consumer Goods Professional Hygiene Group Sustainability statements Corporate governance report Financial statements including notes Other information
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In 2024, Saba® Ultra Invisible Night Towels were launched, featuring fivefold protection, designed for eight hours of maximum protection and uninterrupted sleep throughout the night. Personal and home hygiene for all stages of life The Consumer Goods business area comprises the categories Incontinence Products Retail, Feminine Care, Baby Care and Consumer Tissue, which are sold via the retail trade and e-commerce. Incontinence Products Retail In Incontinence Products Retail, under the globally leading brand TENA, Essity offers a broad range of incontinence products including Lights by TENA for light incontinence and TENA for Men, incontinence products specially designed for men. Essity also sells leakproof apparel under the TENA, TENA for Men, Knix, and Modibodi brands. For the Knix and Modibodi brands, the majority of sales are “Direct-to-Consumer”. Essity is a global leader in Incontinence Products Retail and the market leader in Europe and Latin America. In North America, Essity is the fourth largest player. Feminine Care In Feminine Care, Essity offers a broad product portfolio that includes pads, panty liners, tampons, intimate soaps, intimate wipes, leakproof apparel, and menstrual cups. Essity is the fifth largest player globally with several strong regional brands supported by Essity’s global V-brand platform for shared innovation, marketing, and consumer insights. In Europe, Essity is the third largest player with brands such as Libresse, Bodyform and Nana. Consumer Goods Essity is the market leader in Latin America with the Saba and Nosotras brands. In Australia, Essity is the market leader with the Libra, TOM Organic and Modibodi brands. Through the acquisition of Knix in 2022, Essity is also repre- sented in leakproof apparel in North America under the Knix brand. Baby Care In Baby Care, Essity offers baby diapers and baby care products such as wet wipes, shampoo, lotion, and baby oil. Essity is the fifth largest player globally with sales mainly in Europe where Essity is the second largest player with the Libero and Lotus brands, as well as retailer brands. Essity’s strongest market is the Nordic region, where the Libero brand is the market leader. Consumer Tissue In Consumer Tissue, Essity offers toilet paper, household towels, handkerchiefs, facial tissues, wet wipes, and paper napkins. Essity is the third largest player globally, with a presence primarily in Europe and Latin America. In Europe, Essity is the market leader with brands such as Lotus, Tempo, Zewa, Cushelle and Plenty, and under retailer brands. In Latin America, Essity is the third largest player with the Regio and Familia brands. Net sales, SEKm 78,892 Organic sales growth 0.3% EBITA excl. IAC, SEKm 9,509 EBITA margin excl. IAC 12.1% Contents 31Essity | Annual Report 2024Business areas | Consumer Goods Introduction The Essity share Strategy Business areas Our business areas Health & Medical Consumer Goods Professional Hygiene Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Net sales Net sales increased organically by 0.3%, driven by higher volumes in all categories. Incontinence Products Retail reported high organic growth, mainly due to a strong increase in volumes. Feminine Care also grew organically, driven by higher volumes and a favorable product mix. In Baby Care, volumes increased although sales prices were lower and the product mix was negative, impacted by higher sales of retailer brands. Sales in Consumer Tissue declined organically, mainly related to price reductions carried out in 2023, while volume growth was good. EBITA excl. IAC EBITA and EBITA margin excl. IAC declined, mainly due to lower sales prices and higher investments in marketing and sales to drive growth. Higher volumes combined with lower costs of goods sold made a positive contribution to earnings. Currency translation effects had a negative impact on earnings of SEK 109m compared with the preceding year. Brands: ® Europe, 66% Latin America, 26% North America, 4% Asia, 1% Other, 3% Change in net sales % 2024 vs 2023 Total –1.3 Volume 3.3 Price/Mix –3.0 Organic growth 0.3 Acquisitions 0.0 Divestments –1.2 Currency translation –0.4 Organic sales growth % 2024 vs 2023 % of net sales Incontinence Products Retail 8.5 15 Feminine Care 2.6 18 Baby Care –0.4 9 Consumer Tissue –2.0 58 Key figures 2024 2023 % Net sales, SEKm 78,892 79,912 –1 Organic sales growth, % 0.3 3.7 Gross profit margin excl. IAC, % 28.8 27.5 EBITA excl. IAC, SEKm 9,509 9,797 –3 EBITA margin excl. IAC, % 12.1 12.3 ROCE excl. IAC, % 17.7 18.2 Operating cash flow, SEKm 7,680 8,233 –7 Investments in non-current assets, net SEKm –3,862 –3,373 14 Average number of employees 18,070 18,271 –1 • Higher volumes in all categories • Strong growth in Incontinence Products Retail Net sales Emerging markets accounted for 33% of net sales in Consumer Goods. 2024202320222021 78,892 55,821 72,241 79,912 0.33.7 17.6 0.2 2024202320222021 9,509 5,767 6,354 9,797 12.112.3 8.810.3 EBITA excl. IAC, SEKm EBITA margin excl. IAC, % Net sales, SEKm Organic sales growth, % EBITA excl. IAC Net sales By region In Consumer Goods, 36% of total net sales was related to retailer brands. In Incontinence Products Retail 1%, Baby Care 62%, Feminine Care 7% and Consumer Tissue 51%. The Consumer Tissue Private Label Europe division accounts for 22% of Consumer Tissue. Contents 32Essity | Annual Report 2024Business areas | Consumer Goods Introduction The Essity share Strategy Business areas Our business areas Health & Medical Consumer Goods Professional Hygiene Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Net sales, SEKm 38,067 Organic sales growth –2.5% EBITA excl. IAC, SEKm 6,829 EBITA margin excl. IAC 17.9% In 2024, the Tork Xpress® Compressed Soft Multifold Hand Towel was launched. By compressing the towels, a truck can fit almost 100% more towels and the bundles are also easier for staff to handle. The Professional Hygiene business area comprises products and solutions within Tissue, Wiping, Cleaning, Soap and Sanitizers and dispensing systems as well as selected services. These are sold to companies for use in office buildings, universities, health care facilities, industries, airports, restaurants, hotels, stadiums, and other public venues – via distribu- tors, e-commerce, or direct to the end customer. With the globally leading Tork brand, Essity is the largest supplier of sustainable hygiene solu- tions in Professional Hygiene. Essity is the market leader in Europe and holds a market share that is nearly three times the size of the second largest player. In North America, Essity is the second largest player with a particularly strong market position in the food service segment, where Essity estimates that the company supplies approximately every second paper napkin. Essity is also the largest player in Latin America. Tissue, Services & Solutions In Tissue, Services & Solutions, Essity offers toilet paper, paper hand towels, paper napkins, re usable cloths, dispensers, service and mainte- nance, and digital solutions with sensor tech- nology such as Tork Vision Cleaning, data-driven cleaning. Wiping & Cleaning In Wiping & Cleaning, Essity offers wipers and cloths for keeping surfaces clean and dis infected. In 2022, Essity acquired the US company Legacy Converting, Inc. to expand its range of Wiping & Cleaning solutions and further strengthen its presence in the North American market. Soap & Sanitizers In Soap & Sanitizers, Essity offers soap, lotion, sanitizers, and dispensers. Good hand hygiene is the most effective way to prevent the spread of disease and infection. Through the Tork brand, Essity works to create awareness of the impor- tance of hand hygiene through information campaigns and education. Essity’s award- winning course “Tork Virtual Reality Clean Hands” is one example of how Essity provides inspiring training showing the correct hand washing and hand sanitation procedures for its customers in the healthcare sector. In 2024, Tork launched the initiative #inclusivehygiene in North America to promote inclusive hygiene in public restrooms. Printed paper towels featuring people’s stories about barriers to hand hygiene were made available in public restroom spaces. Contents 33Essity | Annual Report 2024 Sustainable hygiene management solutions for a broad set of commercial applications Professional Hygiene Business areas | Professional Hygiene Introduction The Essity share Strategy Business areas Our business areas Health & Medical Consumer Goods Professional Hygiene Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Net sales Net sales decreased organically by 2.5%, as a result of lower volumes primarily due to restructuring in North America and Europe. Excluding the effect of this, organic growth was 3.0%. The product mix was positive, driven by a higher share of premium products, which are characterized by high margins and customer loyalty. Sales prices were higher. EBITA excl. IAC EBITA and EBITA margin excl. IAC increased, primarily driven by the strong mix trend combined with lower costs of goods sold. Investments in sales to drive growth increased costs. Lower volumes had a negative earnings effect. Currency translation effects had a positive impact on earnings of SEK 25m compared with the preceding year. Brand: Europe, 44% North America, 43% Latin America, 8% Asia, 1% Other, 4% Change in net sales % 2024 vs 2023 Total –3.6 Volume –6.3 Price/Mix 3.8 Organic growth –2.5 Acquisitions 0.0 Divestments –0.6 Currency translation –0.5 Key figures 2024 2023 % Net sales, SEKm 38,067 39,481 –4 Organic sales growth, % –2.5 9.1 Gross profit margin excl. IAC, % 31.7 28.8 EBITA excl. IAC, SEKm 6,829 6,288 9 EBITA margin excl. IAC, % 17.9 15.9 ROCE excl. IAC, % 27.1 23.6 Operating cash flow, SEKm 6,149 7,330 –16 Investments in non-current assets, net SEKm –1,904 –1,696 12 Average number of employees 7,038 7,269 –3 • Strong growth in premium products • Higher EBITA and margin, excl. IAC Net sales Net sales By region Emerging markets accounted for 16% of net sales in Professional Hygiene. 2024202320222021 38,067 24,392 34,393 39,481 –2.5 9.1 25.4 5.8 2024202320222021 6,829 2,673 3,843 6,288 17.9 15.9 11.211.0 EBITA excl. IAC, SEKm EBITA margin excl. IAC, % Net sales, SEKm Organic sales growth, % EBITA excl. IAC Contents 34Essity | Annual Report 2024Business areas | Professional Hygiene Introduction The Essity share Strategy Business areas Our business areas Health & Medical Consumer Goods Professional Hygiene Group Sustainability statements Corporate governance report Financial statements including notes Other information
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Organization President and CEO Professional HygieneHealth & MedicalConsumer Goods EMEAConsumer Goods Americas Global Supply Chain Global Digital & Business Services Communications, Finance, Legal Affairs & Compliance, Human Resources, and Strategy, Business Development & Sustainability1) Global Marketing & Innovation1) Executive Vice President and CFOGroup functions Business units Global units Operations and structure Essity reports its operations in the following three business areas: Health & Medical comprises the categories Incontinence Products Health Care and Medical Solutions. The offering includes inconti- nence products, wound care, compression therapy, orthopedics, skincare products and digital solutions with sensor technology. Consumer Goods encompasses the categories Incontinence Products Retail, Baby Care, Feminine Care and Consumer Tissue. The offering includes incontinence products, pads, diapers, wet wipes, skin cream, intimate soaps, leakproof apparel, menstrual cups, toilet paper, household towels, handkerchiefs, as well as facial tissues and napkins. Professional Hygiene comprises of products and solutions within Tissue, Wiping, Cleaning, Soap, Sanitizers and dispensing systems as well as selected services. The offering includes toilet paper, paper hand towels, napkins, hand soap, hand lotion, hand sani- tizers, dispensers, and cleaning and wiping products. Europe is Essity’s largest market. The Group also conducts sales primarily in North America and Latin America. Expansion takes place through organic growth and acquisitions. Organization Essity has the following four business units: Consumer Goods Americas, which markets and sells products in the categories of Consumer Tissue, Baby Care, Feminine Care and Incontinence Products Retail in Latin America and North America. Consumer Goods EMEA, which markets and sells products in the categories of Consumer Tissue, Baby Care, Feminine Care and Incontinence Products Retail in Europe, the Middle East and Africa. Health & Medical, which markets and sells products in Inconti- nence Products Health Care in Europe, North America, the Middle East and Africa, and markets and sells products in Medical Solu- tions in Asia, Europe, North America, Latin America, Oceania, the Middle East and Africa. Professional Hygiene, which markets and sells complete hygiene solutions as well as service and maintenance in Europe, North America, Latin America, the Middle East and Africa. Essity markets and sells products primarily in Professional Hygiene as well as the categories of Incontinence Products and Feminine Care in Australasia (Australia, New Zealand and some of the Pacific Islands). The business is being operated as separate unit under the name Essity Australasia. The financial reporting of the business units and Australasia is presented under the respective business areas in the company’s external financial reporting. In addition to the business units, Essity has established three global units: Global Marketing & Innovation1) has global responsibility for customer and consumer brands as well as innovation. Research and development (R&D) is coordinated and conducted from a global perspective. Product development is carried out in close cooperation with the local units, as well as through direct collabo- ration with customers. Global Supply Chain has global responsibility for sourcing, production, technology, logistics and distribution in relation to all product categories with the exception of Medical Solutions. Global Digital & Business Services has global responsibility for business services, IT and digitalization. Essity has five Group functions: Communications, Finance, Human Resources, Legal Affairs & Compliance and Strategy, Business Development & Sustainability1) Events after the close of the year On January 22, 2025, Essity announced that Magnus Groth will step down as President and CEO of Essity during 2025. Magnus Groth has a notice period of one year. He will continue as President and CEO of Essity until a successor has been appointed. 1) Until December 31, 2024, sustainability was part of Global Brand, Innovation & Sustainability, which from January 1, 2025 is called Global Marketing & Innovation. As of January 1, 2025, sustainability is included in Strategy, Business Development & Sustainability, previously Strategy & Business Development. Contents 35Essity | Annual Report 2024Group | Operations and structure Introduction The Essity share Strategy Business areas Group Operations and structure Acquisitions, investments and divestments Financial overview Other Group information Risks and risk management Sustainability statements Corporate governance report Financial statements including notes Other information
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Acquisitions, investments and divestments Group | Acquisitions, investments and divestments Divestment of shareholding in Vinda On March 21, 2024, Essity announced that the company, following its acceptance of the public offer from Isola Castle Ltd, had completed the divestment of its entire holding of 51.59% of shares in the Asian hygiene company Vinda International Holdings Limited for HKD 23.50 per share. The sales proceeds amounted to about HKD 14.6bn (approximately SEK 19bn). Investments in 2024 Essity continuously invests in the business to grow the company, gain competitive advantages, and ensure long-term profitability as well as a lower climate footprint. The investments pertain to both the maintenance of existing assets and new production capacity. Essity has increased its investments in non-current assets from an average of approximately SEK 5.8bn per year during the 2021–2023 period to SEK 7.3bn in 2024. The proceeds from the divestment of shares in Vinda have contributed to the financing of investments. Major strategic capital expenditures in 2024: • Investment in a new machine for the production of pant diapers in Olawa, Poland • Investment in a wound care production facility in Hamburg, Germany • Investment in a distribution center for products within Incontinence Products, Professional Hygiene and Feminine Care in Melbourne, Australia • Investment in a new converting line for household towels in Valls, Spain • Investment in a new converting line for paper hand towels in Kostheim, Germany • Investment in new converting line for handkerchiefs in Mannheim, Germany • Investment in a new machine for the production of inconti- nence products in Jarinu, Brazil • Investment in two new bundling machines for toilet paper in Monterrey, Mexico • Investment in a conversion line for compressed napkins in Harrodsburg, USA Contents 36Essity | Annual Report 2024 Introduction The Essity share Strategy Business areas Group Operations and structure Acquisitions, investments and divestments Financial overview Other Group information Risks and risk management Sustainability statements Corporate governance report Financial statements including notes Other information
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Financial overview Net sales Net sales in 2024 decreased by 1.1% to SEK 145,546m (147,147). Sales increased organically by 0.2% (1.8% excluding restructuring and exited contracts), of which volume accounted for 0.5% and price/mix –0.3%. Consumer Goods and Health & Medical reported higher volumes and the underlying volume growth in Professional Hygiene was positive. The mix developed favorably for the Group. Sales prices were lower in Consumer Goods, primarily related to Consumer Tissue. Health & Medical and Professional Hygiene reported higher sales prices. Exchange rate effects decreased net sales by 0.4%. Divestments reduced net sales by 0.9% and included the divestment of the Russian operations. Operating profit The gross margin increased 3.1 percentage points to 32.4% (29.3). The gross margin excl. IAC increased 2.4 percentage points to 32.7% (30.3). The higher margin was primarily related to increased volumes, a positive mix and good price discipline combined with lower cost of goods sold. Cost savings amounted to approximately SEK 1.5bn. Lower sales prices and salary inflation had a negative impact. EBITA increased 17% to SEK 19,475m (16,607). Excl. IAC, EBITA increased 8% (9% excluding currency translation effects) to SEK 20,344m (18,898) and the margin amounted to 14.0% (12.8). The improvement was mainly the result of the increased gross margin, while investments in sales and marketing were higher to drive growth. In addition, salary inflation increased costs. Sales, general and administration costs amounted to 18.8% (17.4), of which marketing costs accounted for 5.2% (4.7) and research and development (R&D) costs for 1.3% (1.2). IAC amounted to SEK –939m (–2,641) mainly attributable to restructuring measures. Currency translation effects had a negative impact on earnings of SEK 166m. Financial items Financial items decreased to SEK –1,931m (–2,356) mainly on account of lower average net debt. Summary income statement SEKm 2024 2023 Net sales 145,546 147,147 EBITA excl. IAC 20,344 18,898 EBITA 19,475 16,607 Operating profit excl. IAC 19,234 17,789 Items affecting comparability (IAC) –939 –2,641 Operating profit 18,295 15,148 Financial items –1,931 –2,356 Profit before tax excl. IAC 17,303 15,433 Profit before tax 16,364 12,792 Income taxes excl. IAC –4,525 –3,799 Income taxes –4,331 –3,275 Profit before tax excl. IAC 12,778 11,634 Profit for the period1) 12,033 9,517 Profit for the period2) 21,048 9,796 Organic sales growth, % 0.2 5.8 Gross margin, % 32.4 29.3 Gross margin excl. IAC, % 32.7 30.3 EBITA margin, % 13.4 11.3 EBITA margin excl. IAC, % 14.0 12.8 Earnings per share, SEK1) 17.09 13.44 Earnings per share excl. IAC, SEK1) 2) 19.29 17.56 1) Continuing operations. 2) Total operations. 3) Excluding amortization of acquisition-related intangible assets. EBITA excl. IAC EBITA excl. IAC, SEKm EBITA margin excl. IAC, % Net sales, SEKm Organic sales growth, % Net sales Change in net sales % 2024 vs 2023 Total –1.1 Volume 0.5 Price/Mix –0.3 Organic growth 0.2 Acquisitions 0.0 Divestments –0.9 Currency translation –0.4 2024202320222021 101,466 131,320 147,147 145,546 2.6 17.3 5.8 0.2 2024202320222021 11,451 12,047 18,898 20,344 11.3 9.2 12.8 14.0 Contents 37Essity | Annual Report 2024Group | Financial overview Introduction The Essity share Strategy Business areas Group Operations and structure Acquisitions, investments and divestments Financial overview Other Group information Risks and risk management Sustainability statements Corporate governance report Financial statements including notes Other information
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Operating cash flow statement SEKm 2024 2023 Operating cash surplus 26,998 25,569 Change in inventories –946 2,505 Change in operating receivables –2,218 –19 Change in operating liabilities 2,756 –1,401 Investments in non-current assets, net –7,332 –6,819 Restructuring costs, etc. –1,456 –1,542 Investments in operating assets through leases –560 –608 Operating cash flow 17,242 17,685 Financial items –1,931 –2,356 Income taxes paid –5,860 –3,615 Other 34 –89 Cash flow from current operations 9,485 11,625 Acquisitions of Group companies and other operations –68 –182 Divestments of Group companies and other operations 23,908 1,249 Cash flow before transactions with shareholders 33,325 12,692 Dividend –5,443 –5,092 Dividend to non-controlling interests –23 –2 Buyback of own shares –2,224 – Net cash flow, continuing operations 25,635 7,598 Net cash flow, discontinued operations –467 866 Net cash flow, total operations 25,168 8,464 Investments in non-current assets Depreciation1) Investments in non-current assets, net Cash flow Divestments Cash flow from current operations Company acquisitions Cash flow before dividend–/two.tab/zero.tab/comma.tab/zero.tab/zero.tab/zero.tab –/one.tab/zero.tab/comma.tab/zero.tab/zero.tab/zero.tab /zero.tab /one.tab/zero.tab/comma.tab/zero.tab/zero.tab/zero.tab /two.tab/zero.tab/comma.tab/zero.tab/zero.tab/zero.tab /three.tab/zero.tab/comma.tab/zero.tab/zero.tab/zero.tab /four.tab/zero.tab/comma.tab/zero.tab/zero.tab/zero.tab 2024202320222021 SEKm /zero.tab /two.tab/comma.tab/zero.tab/zero.tab/zero.tab /four.tab/comma.tab/zero.tab/zero.tab/zero.tab /six.tab/comma.tab/zero.tab/zero.tab/zero.tab /eight.tab/comma.tab/zero.tab/zero.tab/zero.tab /one.tab/zero.tab/comma.tab/zero.tab/zero.tab/zero.tab 2024202320222021 SEKm Tax The tax expense amounted to SEK 4,331m (3,275), corresponding to a tax rate of 26.5% (25.6). The tax expense excl. IAC amounted to SEK 4,525m (3,799), corresponding to a tax rate of 26.2% (24.6). The tax rate amounted to negatively affected by non-recurring items. Profit for the period Profit for the period, total operations, amounted to SEK 21,048m (9,796). Earnings were impacted positively by the capital gain of approximately SEK 9bn from the divestment of the holding in Vinda. Profit for the period, continuing operations, amounted to SEK 12,033m (9,517). Cash flow Operating cash flow amounted to SEK 17,242m (17,685). Net cash flow for continuing operations was SEK 25,635m (7,598), and for discontinued operations it amounted to SEK –467m (866). 1) Excluding amortization of acquisition-related intangible assets and depreciation of right-of-use assets. Contents 38Essity | Annual Report 2024Group | Financial overview Introduction The Essity share Strategy Business areas Group Operations and structure Acquisitions, investments and divestments Financial overview Other Group information Risks and risk management Sustainability statements Corporate governance report Financial statements including notes Other information
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Consolidated balance sheet SEKm 2024 2023 Intangible assets 61,871 60,682 Property, plant and equipment 52,392 48,843 Other non-current assets 6,112 6,577 Total non-current assets 120,375 116,102 Current assets 64,909 54,564 Assets held for sale – 32,327 Total assets 185,284 202,993 Equity 88,741 79,405 Non-current liabilities 51,253 56,397 Current liabilities 45,290 53,483 Liabilities directly attributable to assets held for sale – 13,708 Total equity and liabilities 185,284 202,993 Financial position 2024 2023 Working capital, SEKm 10,746 8,771 Capital employed, SEKm 119,510 110,750 Net debt, SEKm 30,769 53,703 Debt/equity ratio, multiple 0.35 0.68 Debt payment capacity, % 59 34 Net debt/EBITDA 1.19 2.16 Net debt/EBITDA excl. IAC 1.16 2.00 Change in net debt SEKm 2024 2023 Net debt, January 1 –53,703 –62,869 Net cash flow 25,168 8,464 Remeasurements to equity 96 1,339 Investments in non-operating assets through leases –581 –491 Translation differences –1,749 –146 Net debt, December 31 –30,769 –53,703 Capital employed, share of Group ROCE excl. IAC and ROE excl. IAC Net debt ROCE excl. IAC ROE excl. IAC Net debt, SEKm Net debt/EBITDA excl. IAC Health & Medical, 30% Consumer Goods, 48% Professional Hygiene, 22% /zero.tab /five.tab /one.tab/zero.tab /one.tab/five.tab /two.tab/zero.tab /two.tab/five.tab 2024202320222021 /percent.tab 2024202320222021 55,433 62,869 53,703 30,769 3.14 3.33 2.00 1.16 Financial position Net debt decreased by SEK 22,934m compared with December 31, 2023 and amounted to SEK 30,769m, primarily driven by the divestment of Vinda, which contributed SEK 19,360m, and strong operating cash flow. The Group’s interest-bearing gross debt amounted to SEK 42,749m (56,846) at year-end. The average maturity period was 3.8 (3.5) years. Compared with December 31, 2023, working capital increased to SEK 10,746m, mainly due to higher inventory levels and trade receivables. Higher trade payables reduced working capital. Working capital amounted to 7% (6) of net sales. Equity attributable to owners of the Parent company increased SEK 17,468m compared with December 31, 2023. Profit for the period attributable to owners of the Parent company increased the equity of owners of the Parent company by SEK 20,888m, mainly related to the divestment of Vinda. The dividend of SEK 5,443m and the buyback of own shares of SEK 2,224m reduced equity attributable to owners of the Parent company. The Group’s total equity increased SEK 9,336m during the year. Contents 39Essity | Annual Report 2024Group | Financial overview Introduction The Essity share Strategy Business areas Group Operations and structure Acquisitions, investments and divestments Financial overview Other Group information Risks and risk management Sustainability statements Corporate governance report Financial statements including notes Other information
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Other Group information Brands: Parent Company The Group’s Parent company, Essity Aktiebolag (publ), is a holding company with the main task of owning and managing shares in a number of business group companies and performing Group-wide management and administrative functions. The company’s corporate registration number is 556325-5511 and it is domiciled in Stockholm, Sweden. The company’s address is PO Box 200, SE-101 23 Stockholm. The recognized operating income 2024 amounted to SEK 688m (382), profit before appropriations and tax to SEK 18,242m (1,821) and the net profit for the year to SEK 18,151m (376). Investments in property, plant and equipment totaled SEK 4m (1) during the year. Cash and cash equivalents at year-end amounted to SEK 0m (0). ® Disposition of earnings Essity Aktiebolag (publ) Non-restricted equity in the Parent company: retained earnings 63,862,307,344 net profit for the year 18,150,845,487 Total 82,013,152,831 The Board of Directors and the President propose: to distribute to shareholders, a dividend of SEK 8.25 per share 5,733,292,0341) to be carried forward 76,279,860,7972) Total 82,013,152,831 1) Based on the number of shares outstanding, December 31, 2024. The final dividend amount will be based on the number of shares outstanding on the record date, March 31, 2025. 2) The company’s equity would have been SEK 592,566,774 higher if assets and liabilities had not been measured at fair value in accordance with Chapter 4, Section 14a of the Swedish Annual Accounts Act. Sustainability statements Essity’s statutory sustainability statements, in accordance with the requirements of the Swedish Annual Accounts Act, can be found on pages 47–99 in the Board of Directors’ Report. This sustain- ability statements for Essity Aktiebolag (publ) encompasses the entire Group. Further information on the reporting principles for sustainability can be found on page 48. Guidelines for remuneration of senior executives The most recent guidelines approved by the Annual General Meeting can be found under Note C2 on pages 145–146. The company’s application of the guidelines can be found under Note C2 and in the remuneration report for 2024, which is available at essity.com. For information on the company’s expenses for remuneration of senior executives, see Note C2 on page 147. Contents 40Essity | Annual Report 2024Group | Other Group information Introduction The Essity share Strategy Business areas Group Operations and structure Acquisitions, investments and divestments Financial overview Other Group information Risks and risk management Sustainability statements Corporate governance report Financial statements including notes Other information
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Risks and risk management Essity is exposed to a number of strategic, operational and financial business risks, which could have a negative impact on the Group’s operations. Accordingly, it is of major importance that the company has a systematic and effective process to identify, manage and mitigate the effects of these risks. Risk management The responsibility for risk management follows the company’s delegation scheme, from the Board of Directors to the President, and from the President to each Group function, global unit or busi- ness unit depending on the type of risk, where it occurs, which unit is affected and the measures required to manage the risk. The delegation scheme therefore means that some risks are managed centrally at Group level while other risks are managed by the respective unit or function. Essity’s risk management of financial risks and energy risks is centralized and handled by the Group’s internal bank. The financial risks are managed in accordance with the Group’s Finance Policy, which is adopted by Essity’s Board of Directors. Together with Essity’s Energy Risk Policy, the Finance Policy constitutes a framework for financial risk management. The financial risks are com- piled and continuously monitored. The Group’s risk management department is responsible for insurable operational risks, such as risks related to production facilities and asset damage. Essity also has centralized risk management for information security risks and risks linked to ethics, personal data and human rights, which are managed by the Group’s IT department and compliance department, respectively. The identification and management of business risks is decentralized and is the responsibility of each business unit, global unit or function. Coordination and follow-up of identified business risks are managed centrally by the strategy department and form an essential part of the annual strategy process. Identified risks are assessed according to the likelihood of these occurring and the potential impact each risk could have on the Group. This process also includes specifying who is responsible for managing the respective risk, and measures for how the risk shall be mitigated and followed up. Development of the identified risks is monitored and assessed on an ongoing basis. The Executive Management Team and the Board of Directors are informed about the company’s risk management processes. Essity also has an internal audit function, which ensures that the organization complies with the adopted policies. Contents Group | Risks and risk management 41Essity | Annual Report 2024 Introduction The Essity share Strategy Business areas Group Operations and structure Acquisitions, investments and divestments Financial overview Other Group information Risks and risk management Sustainability statements Corporate governance report Financial statements including notes Other information
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Contents 42Essity | Annual Report 2024Group | Risks and risk management GDP trend and economic conditions Risk: Demand for Essity’s products is affected by general macroeco- nomic fluctuations and the resulting changes to customer purchasing power and consumption patterns. For example, a tighter budget situation in the public sector or among business customers influences sales in both the healthcare sector and business-to-business (B2B). Sales to the retail sector, which accounts for the bulk of sales of hygiene products, may also be affected by reduced purchasing power among consumers. Action: Essity continuously works to manage the effect of cyclical fluctuations, for example, through measures to reduce costs, increase efficiency and to create higher customer value through product innovations. Essity also works on differentiation to move toward product areas that are less sensitive to economic fluctuations. Changes in demographics, consumer behavior and preferences Risk: Changing demographics, consumer behavior and preferences alter demand from customers and consumers. There is a risk of a decline in demand for our products if we do not successfully satisfy customer and consumer needs and adapt our innovation program, product portfolio, sales channels, brand-building activities and communication accordingly. Action: Customer and consumer insight constitute the core of Essity’s innovation work. Through knowledge about people’s daily needs and challenges, we create an offering that improves quality of life for users. We continuously analyze customer and consumer data and listen to consumers, customers, experts and opinion formers to improve our offering. Global health risks Risk: Extensive outbreaks of disease entail risks for Essity’s opera- tions, not least in terms of the risks posed to our employees’ health and safety and their ability to carry out their work. Lockdowns, more stringent border security measures or other restrictions may cause disruptions at our production facilitates or in the supply chain. More extensive outbreaks of disease may also result in a temporary fall in demand for some of our products and changed consumer behavior. Political decisions and regulatory measures Risk: Essity conducts operations in many different countries. In some countries, the institutional structures are more established and devel- oped, while the political, financial, legal and regulatory systems in other countries are less predictable. Institutional structures and dialogues between countries may impact Essity and its operations. Various political changes and decisions, as well as amended legislation and regulations, could have a negative impact on Essity’s operations in the form of higher costs or some other obstruction. In general, the regulatory requirements imposed on Essity’s operations are increasing. Action: In connection with extensive outbreaks of disease, the highest priority is to take action to safeguard the health of employees. Essity takes a series of measures adapted to the local operations to reduce the risk of infection. Where necessary, the company also modifies its solutions for sourcing of raw materials, storage and logistics, and has increased digital interaction. Action: Essity works continuously to monitor, evaluate and anticipate changes in its business environment in the form of political decisions, dependencies and amended regulations in the areas that are of importance for the business. Essity participates in various national and international industry organizations, as well as in other types of partnerships and dialogues. The aim is to gain early knowledge of, and to contribute actively with expertise and solutions to, the development of areas of significance to our opera- tions. The public sector is both an important stakeholder group and a significant customer for Essity. The company is therefore working actively on matters relating to health and medical care, as well as care for the elderly. Environmental impact and climate change Risk: Essity’s operations and the products used in the manufacturing process have an impact on air, water, land, biodiversity and the climate. Essity is subject to extensive environmental regulations. More stringent environmental requirements, remediation of the environment in connection with plant closures or breaches of permits could incur higher costs. Read more about these risks on pages 47–99. Action: Essity’s strategy and sustainability targets stipulate guide- lines for the Group’s measures within the environmental area. Environmental impact and the impact of climate change are part of the annual strategy process, which includes the identification, assessment and actions for managing these types of risks. These are managed, for example, through preventive work in the form of certified environmental management systems, environmental risk inspections in conjunction with acquisitions, and remediation projects in connection with plant closures. Essity has integrated a risk assessment of biodiversity into its risk management process. The use of energy, water, transport, production waste and raw materials is controlled using the company’s Resource Manage- ment System (RMS). The system also enables the simulation of investments on the basis of climate aspects. The data is used for internal control and follow-up of established targets. Essity also works continuously to reduce the volume of production waste. Read more about Essity’s actions on pages 47–99. Introduction The Essity share Strategy Business areas Group Operations and structure Acquisitions, investments and divestments Financial overview Other Group information Risks and risk management Sustainability statements Corporate governance report Financial statements including notes Other information
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Contents 43Essity | Annual Report 2024Group | Risks and risk management Dependence on major customers and sales channels Risk: Essity’s products are sold through retailers, pharmacies, e-com- merce, distributors and resellers. Retail represents the single largest customer category. In general, there is a consolidation trend in several of Essity’s sales channels and markets, particularly in the retail trade and distributor landscape, through purchasing alliances and mergers, which could increase dependence on individual, large customers. In addition, an increasing importance of omnichannel in B2B sales is evident. Action: Essity’s customer structure is relatively dispersed, with customers in many different geographies and areas of business. In 2024, Essity’s ten largest customers, most of them retail companies and distributors, accounted for 24.3% of net sales. The company works to maintain strong long-term customer relationships in strategic customer segments, and to build relationships with new customers. Essity is participating by increasing the share of e-commerce by driving omnichannel in B2B sales. Unethical business practices Risk: Essity works in a large number of countries and in environments where unethical business practices and violations of human rights may occur. The consequences of such business practices and violations may be severe in the form of various sanctions and fines. Violations also risk having a negative impact on the company’s reputation. Action: Essity has a program for regulatory compliance, which aims to minimize the risk of Essity taking part in or being associ- ated with unlawful or unethical business practices or committing violations of human rights. The program is based on a Code of Conduct adopted by the Board of Directors. Within certain areas, such as human rights, corruption and competition regulations, Essity has an in-depth program for risk evaluations, audits of third parties and various training courses for employees. The implementation of the regulatory compliance program is reported continuously to the Compliance Council, which includes parts of Essity’s senior management and where internal audit has an opportunity to participate. Competition Risk: Essity is subject to considerable competition from other industry players offering similar products. Essity is also exposed to the risk that alternative products, solutions, services or business models that meet customer or consumer needs may replace Essity’s offering, which risks jeopardizing the company’s position in the market. Action: Essity’s focus on customer and consumer insight guides its innovation activities, ensuring that new products and services are attractive and competitive. Essity develops the company’s offering to meet the needs of customers and consumers in terms of the products themselves, and to ensure that they are provided in the relevant sales channels. Read more about innovation on page 21. Employees Risk: To meet its targets, Essity is dependent on being able to recruit, retain and develop qualified and motivated employees. The higher degree of digitalization and accelerating technological development have led to a major skills shift in the world, which has affected the availability of skilled and qualified workers. Action: Through annual staffing, competency and succession plan- ning, Essity ensures that employees are recruited and that these remain with the company and develop the right skills. Essity contin- uously strives to build a reputation for the company as an attractive employer, highlighting health and safety in the workplace, health promotion, market-based and competitive forms of employment, continuous learning and the possibility to take on new challenges in the Group. A modern and attractive corporate culture also plays a highly significant role in the recruitment of employees. Read more about Essity’s actions on pages 19 and 83–90. Production facilities Risk: Essity has around 70 production facilities and major warehouses in some 30 countries. Fires, machinery breakdowns and other types of harmful incidents in plants (including damages caused by natural disasters) could lead to considerable value destruction, and loss of production and income, which ultimately, could have a negative impact on Essity’s market position. Action: Essity strives to create and maintain a balance between loss-prevention activities and insurance coverage. Essity invests con- tinuously in loss-prevention measures. These efforts are conducted in accordance with established guidelines that include repeated risk inspections carried out by external risk engineers. Other important elements of loss-prevention activities are maintenance of production plants and machinery, staff training, and orderliness. All wholly owned production facilities are insured at replacement cost and for the loss of income. Within the EU, insurance is primarily conducted within the company’s own insurance company, with external reinsurance for major damages. Outside the EU, Essity cooperates with market-leading insurance companies. Geopolitical risks Risk: A series of geopolitical events and developments risk impacting Essity’s business. The risk of political or military conflicts within or between states, trade disputes or other significant changes to interna- tional relations, as well as terrorist acts are examples of events that risk negatively impacting Essity’s business in various ways. Action: Essity continuously monitors and assesses political devel- opments in the countries and regions where Essity has operations and the geopolitical development that could otherwise affect Essity’s operations. A geopolitical risk assessment also constitutes part of the annual strategy process. When necessary, surveillance is extended and an assessment is made of which measures Essity can take to limit the impact on the company. Introduction The Essity share Strategy Business areas Group Operations and structure Acquisitions, investments and divestments Financial overview Other Group information Risks and risk management Sustainability statements Corporate governance report Financial statements including notes Other information
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Contents 44Essity | Annual Report 2024Group | Risks and risk management Energy price Risk: Energy price risk is the risk that increased energy prices could adversely impact Essity’s operating profit. Essity is exposed to move- ments in the prices of electricity and natural gas, but the prices of other energy commodities also directly and indirectly impact Essity’s operating profit. Action: Essity centrally manages the energy price risk related to electricity and natural gas. According to Essity’s Energy Risk Policy, these price risks can be hedged for a period of up to 36 months. Exceptions are made for regulated and non-hedge- able markets. Essity also monitors the developments related to energy policy and decisions that may affect supply and price. Energy prices are hedged through financial instruments and, in part, through fixed pricing in existing supply contracts. Essity safeguards the supply of electricity and natural gas through centrally negotiated supply contracts. The portfolio of supply contracts and financial hedges is effectively spread to minimize Essity’s counterparty risk. In 2024, Essity purchased about 4 TWh (4; 4) of electricity and about 7 TWh (7; 7) of natural gas. The graph shows Essity’s price hedges in relation to forecast consumption of electricity and natural gas for the next three years. The graph includes financial hedges and hedging effected via supply contracts. For further information concerning financial price hedges, see Note E6 Derivatives and hedge accounting on page 160. Electricity Natural gas % 0 10 20 30 40 50 202720262025 Energy price hedges in relation to forecast consumption, December 31, 2024 Legal risks Risk: Legal risks are found within a number of diverse areas. Risks related to competition law, trade regulations, protection of intellectual property and confidential information, protection of personal data, violations of laws in the operations, contractual risks and changes in legislation are examples of legal risks that could have negative financial implications for Essity. In certain instances, they may also entail protracted and costly legal processes. Action: Essity constantly monitors developments in a number of areas and addresses any legal risks that arise in cooperation with external advisers. Legal issues are often national, which means that local experts are also often engaged by Essity in various issues. Information and IT Risk: Essity is increasingly dependent on information and IT systems and information security. Disruptions or faults in critical systems, as well as the increasing prevalence of cyber-attacks and attempted fraud, may have financial implications and lead to production dis- ruptions and negative consequences for other business processes. Errors in financial systems may affect the company’s reporting of results. Weaknesses in information security may lead to legal action. Action: Essity’s IT organization has a framework for governance and quality describing how changes in IT systems and the daily operations are carried out through standardized processes. A management system for information security has been imple- mented and is continuously adapted based on risk assessments, digital development and demands from external stakeholders. Technical protection, such as preventive, detective, responsive and restorative measures are implemented, in addition to regular security training courses for each employee. The head of Global Digital & Business Services, who is a member of the Executive Management Team, is responsible for managing information security-related risks. Suppliers Risk: Essity is dependent on a large number of suppliers. A sudden shortage of key input goods could result in increased costs and disruptions to the company’s production. Suppliers could also cause problems for Essity through non-compliance with applicable legisla- tion and guidelines or by otherwise acting in an unethical manner. Action: Essity enters into supply contracts of various durations that ensure the supply of key input goods. The Group has several suppli- ers for essentially all important input goods. In-depth collaboration also occurs with specially selected suppliers in the development of materials and processes. Essity continuously evaluates its suppliers to ensure compliance with agreements entered into. Particular importance is placed on suppliers operating in countries and industries deemed to be more vulnerable to risks. Key suppliers are assessed through questionnaires, on-site visits or independent audits. Introduction The Essity share Strategy Business areas Group Operations and structure Acquisitions, investments and divestments Financial overview Other Group information Risks and risk management Sustainability statements Corporate governance report Financial statements including notes Other information
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Contents 45Essity | Annual Report 2024Group | Risks and risk management Cost of input goods Risk: Input goods account for a considerable part of Essity’s total operating expenses. The market price of input goods fluctuates over time and could influence Essity’s earnings positively or negatively. The price trend for a number of input goods over the past ten years is presented in the diagram below. Highest/lowest market prices (annual average) 2014–2024 per input goods Index 0 40 80 120 160 200 Recovered paper – SOP (USD) Pulp – EUCA (USD) Oil-based material – Propylene (SAP) (EUR) Average price for the period Recovered paper – SOP (EUR) Pulp – NBSK (USD) Currency Transaction exposure Risk: Transaction exposure is the risk that exchange rate movements in export revenues as well as import expenses and other costs could negatively impact the Group’s operating profit and the cost of non-current assets. Translation exposure Risk: Translation exposure is the risk to which Essity is exposed when translating foreign Group companies’ balance sheets and income statements to SEK. Action: Essity manages translation exposure by distributing the liability across the various currencies where the Group owns assets so that key figures that are important for the company’s credit rating are protected in the long-term against exchange rate effects. Translation exposure in the income statements of foreign Group companies is not hedged. At December 31, 2024, net debt amounted to SEK 30,769m (49,964; 62,869). Net debt distributed by currency Share of net debt, % Currency Net debt, SEKm 2024 2023 2022 EUR 15,587 51 48 32 SEK 5,090 17 24 18 USD 3,900 13 13 11 GBP 2,938 10 3 12 MXN 2,240 7 4 4 AUD 1,861 6 12 11 CAD 1,410 5 1 1 PLN 797 3 1 –1 Other –3,054 –12 –6 12 Total 30,769 100 100 100 For further information relating to hedging of translation exposure, see Note E6 Derivatives and hedge accounting on page 160. Action: Fiber (pulp and recovered paper) is a significant cost, mainly in the Consumer Goods and Professional Hygiene business areas. Essity is evaluating alternative types of fiber, such as straw from wheat as a means of diversifying fiber sourcing in the future. The cost of oil-based materials is driven by the trend in oil prices and represents a major cost in the Consumer Goods business area and for various packaging materials. The trend in oil prices also impacts transport costs. The impact of price movements on input goods can be delayed through purchas- ing agreements with fixed durations. Efficiency improvements in the company’s operations, altered product specifications and price increases are examples of measures to offset the effect of rising costs for input goods. Essity’s costs for input goods are described on page 187. Action: Most of Essity’s business is conducted outside Sweden and transaction exposure therefore arises primarily in currencies other than SEK. The largest exposure comprises a purchase requirement for USD and selling requirements for GBP and MXN. The significant USD exposure is a consequence of the Group’s purchase of pulp that is invoiced in USD. Transaction exposure, resulting from exports and imports, can be hedged for a period of up to 18 months. Contracted future payments for non-current assets in foreign currencies can be hedged up to the full cost. The currencies with the greatest net volume were hedged as follows: USD 3.1 months, GBP 1.2 months and MXN 6.2 months. During the year, there was continuous hedging of, primarily, trade receivables and payables, as well as future payments for non-current assets. The majority of hedges mature during the first quarter of 2025. Net flows in 2024 SEKm 3,747 2,083 1,898 1,489 1,472 1,319 1,247 1,177 –1,230 –3,407 –13,552 3,757 –15,000 –10,000 –5,000 0 5,000 OtherUSDSEKEURHUFDKKCHFNOKAUDCADMXNGBP For further information relating to hedging of transaction exposure, see Note E6 Derivatives and hedge accounting on page 160. Introduction The Essity share Strategy Business areas Group Operations and structure Acquisitions, investments and divestments Financial overview Other Group information Risks and risk management Sustainability statements Corporate governance report Financial statements including notes Other information
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Credit Risk: Credit risk refers to the risk of losses due to a failure by Essity’s customers, or counterparties in financial agreements, to meet payment obligations. Liquidity and refinancing Risk: Liquidity and refinancing risk is the risk that Essity is unable to meet its payment obligations as a result of insufficient liquidity or difficulty in raising new loans. Interest rate Risk: Interest rate risk relates to the risk that changes to interest rates could have a negative impact on Essity. Essity is affected by interest rate movements through financial income and expenses, cash flow and the value of its financial assets and liabilities. Action: To ensure good access to loan financing, regardless of economic situation and on attractive terms, Essity strives to maintain a solid investment grade rating. Essity maintains a financial flexibility in the form of a liquidity reserve consisting of cash and cash equivalents and unutilized credit facilities totaling at least 10% of the Group’s forecast annual sales. Essity limits its refinancing risk by having a well-distributed maturity profile of its gross debt. The gross debt must have an aver- age maturity in excess of three years, taking long-term unutilized credit facilities – which are not part of the liquidity reserves – into account. Surplus liquidity should primarily be used to repay exter- nal liabilities. Essity’s policy is to avoid terms that entitle the lender to terminate loans or adjust interest rates as a direct consequence of movements in Essity’s financial key ratios or credit rating. The Group’s financing is mainly secured by bank loans, bond loans and through issuance of commercial papers. The refinancing risk in short-term borrowing is mitigated through long-term credit facilities from bank syndicates and individual banks with favorable creditworthiness. Essity’s net debt decreased by SEK 19,195m in 2024. At year-end, the average maturity of gross debt (excluding leases and pensions) was 3.8 years (3.5; 3.9). If short-term loans would be replaced with long-term unutilized credit facilities, the average maturity would amount to 4.2 years. Unutilized short- and long-term credit facilities amounted to SEK 57,303m at year-end. In addition, cash and cash equivalents totaled SEK 10,962m. Liquidity reserve SEKm 2024 2023 2022 Unutilized credit facilities 57,303 66,340 22,245 Cash and cash equivalents 10,962 5,159 4,288 Total 68,265 71,499 26,533 SEKm 2024 2023 2022 Net sales 145,546 147,147 131,320 Liquidity reserve1) 47 49 20 1) Liquidity reserve as a percentage of net sales. For further information, see Note E2 Financial assets, cash and cash equivalents on page 157, Note E4 Financial liabilities on page 159 and Note E5 Liquidity risk on page 160. Credit risk in trade receivables Action: Credit risk in trade receivables is managed through credit checks of customers using credit rating companies. The credit limit is set and regularly monitored. Trade receivables are recognized at the amount that is expected to be paid based on an assessment of the expected credit losses for the remaining lifetime of all trade receivables at the balance sheet date. For further information concerning trade receivables and recognition of expected credit losses, see Note E3 Trade receivables on page 158. Financial credit risk Action: Essity’s Finance Policy regulates the maximum permitted counterparty risk depending on the counterparty’s credit rating from the credit rating agencies Standard & Poor’s, Moody’s and Fitch. The objective is that counterparties must have a minimum credit rating of BBB+ or equivalent from at least two of these credit rating agencies. Credit exposure in derivative instruments is calculated as the market value of the instrument on the balance sheet date. Credit exposure in derivative instruments amounted to SEK 1,102m (1,989; 4,416), gross. Taking net calculation agreements per counterparty into consideration, credit exposure of derivatives amounted to SEK 355m (540; 1,096). At year-end, the total credit exposure was SEK 13,817m (5,847; 6,891). This exposure includes credit risk of SEK 13,318m (5,318; 4,461) for financial investments. Refer to the table below for the distribution of credit risk by category. Financial credit exposure Category1) SEKm A B C Total Financial assets measured at fair value through other comprehensive income 109 109 Financial assets measured at amortized cost 26 26 Cash and bank balances 8,633 1,116 1,213 10,962 Derivative assets, net 274 6 84 364 Current investments 2,356 2,356 Total 11,263 1,122 1,432 13,817 1) A: Investment grade, a long-term credit rating from one or more of the agencies of at least: Moody’s (Baa3), Standard & Poor’s (BBB–) and Fitch (BBB–). B: Non-investment grade, a long-term credit rating lower than: Moody’s (Baa3), Standard & Poor’s (BBB–) and Fitch (BBB–). C: No credit rating (mainly assets that lack a separate credit rating and cash and cash equivalents in regulated markets). Action: Essity strives to achieve a solid distribution of its interest maturity dates to avoid large debt volumes of renewals occurring at the same time. Essity’s policy states that the average interest duration shall be a minimum of three months and a maximum of 36 months. Essity’s financial items decreased in 2024. This was mainly due to lower net debt. Essity’s major funding currencies are EUR, SEK and USD, refer to the graph below. To achieve the desired interest rate duration, Essity uses financial derivatives. The average interest rate duration for the gross debt, including derivatives, was 11.5 months (10.7; 13.9) at year-end. The average interest rate for the total outstanding net debt including derivatives, amounted to 4.70% (4.07; 3.48) at year-end. Gross debt distributed by currency SEKm –5,000 0 5,000 10,000 15,000 20,000 OtherCADAUDMXNGBPUSDSEKEUR Read about climate-related risks and opportunities on pages 59 and 68–69. Contents 46Essity | Annual Report 2024Group | Risks and risk management Introduction The Essity share Strategy Business areas Group Operations and structure Acquisitions, investments and divestments Financial overview Other Group information Risks and risk management Sustainability statements Corporate governance report Financial statements including notes Other information
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Contents 47Essity | Annual Report 2024 Essity is committed to improve hygiene and health while responsibly managing company resources as basis for lasting value creation for its stakeholders. One of Essity’s overall ambitions is to be a business with net zero emissions by 2050. The following pages outline the actions taken and the progress made by Essity toward reaching its sustainability targets and ambitions. Contents Sustainability statements SE GI General disclosures Page Basis for preparation 48 Governance 50 Strategy and business model 53 Impact, risk and opportunity management 61 Environmental disclosures Page EU taxonomy report 62 Climate change 66 Water 74 Forest and fiber 76 Resource use and circular economy 78 Social disclosures Page Own workforce 83 Workers in the value chain 91 Consumers and end-users 94 Governance disclosures Page Business conduct 97 Sustainability statements Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Basis for preparation Basis for preparation General basis for preparation of these sustainability statements Sustainability reporting frameworks and assurance These sustainability statements are part of Essity’s Annual Report 2024 and in accordance with the require ments for the statutory sustainability report stated in the Annual Accounts Act and the Global Reporting Ini tiative (GRI) Standards 2021. As no applicable GRI sector standard is currently available for Essity’s industry, Essity’s sustainability statements concentrate on the universal and topical standards. In line with GRI report ing principles, the content of Essity’s sustainability statements is determined by the topics most material to Essity and its stakeholders. The structure of the sustainability statements, the description of the value chain and the double material ity assessment are inspired by the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) which will be mandatory for Essity to report in accordance with from the financial year 2025. The topics identified in the double materiality assessment are matched against GRI disclosure require ments and determine the selection of disclosures that Essity presents in these statements. Essity reports in accordance with all GRI disclosures identified as material and for which material data can be reported. Any omissions or incomplete data are commented on directly in the GRI index. The GRI index can be found on pages 100–102. The sustainability statements have been reviewed by Essity’s auditors Ernst & Young AB. Additional information about Essity’s work on social, environmental and governance matters is available at essity.com/sustainability. Boundaries These sustainability statements for 2024 are prepared on a consolidated basis and include data for all com panies of which Essity owns at least 50%. The consolidation scope of the sustainability statements is there fore identical to the consolidation scope of the financial statements. Reported data includes information for the entire company regardless of the ownership structure. Any deviations from these principles are stated in these sustainability statements. In March 2024, Essity divested its shares in the Asian hygiene company Vinda. Any inclusion of Vinda related data in comparative periods is stated with the respective data. An overview of the upstream and downstream value chain can be found in the result of the double materiality assessment, see pages 59–60. Reliability, estimates and uncertainty The main source for estimations and uncertainties within Essity’s sustainability statements is greenhouse gas emissions data. Estimation methods: • Scope 1 and 2 emissions – Direct and indirect emissions from Essity’s own production facilities are cal culated using own primary activity data and corresponding emission factors for fuels and electricity. Therefore, the accuracy of these greenhouse gas emissions is assessed as high. • Scope 3 emissions – Other indirect emissions that occur in the value chain, including both upstream and downstream emissions, are estimated using a combination of primary and secondary supplierspecific data, industry averages and proxy data. This entails a higher level of uncertainty due to the variability and lack of availability of data from third parties. Sources of uncertainty (Scope 3): • Data quality – The accuracy of our greenhouse gas emissions data is dependent on the quality and completeness of data provided by our suppliers and other third parties. Generally, where activity data comprises Essity’s own primary data, accuracy is high. In some cases where direct data is unavailable we rely on estimates and proxies. • Emission factors – The emission factors used in our calculations are based on combinations of supplier specific information, internally calculated emission factors from lifecycle assessments (LCAs) and indus try standards. Factors may represent different geographical regions and are regularly updated. • Methodological choices – Following the Greenhouse Gas Protocol (GHG Protocol), several methods for calculations of Scope 3 emissions are used, including the supplierspecific method, hybrid method, average data method and spendbased method. Improvement measures: We are committed to continuously improving the accuracy and reliability of our greenhouse gas emissions data. This commitment includes enhancing data collection processes, engaging with suppliers to obtain more precise data and regularly reviewing and updating our estimation methodologies. I Contents 48Essity | Annual Report 2024Sustainability statements | I – General disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures | Basis for preparation Governance Strategy and business model Impact, risk and opportunity management Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Reliable management systems Essity has an ISO 27001 certified Information Security Management System (ISMS) in place to meet internal and external requirements on information security. Selected products and services have also been certified according to the ISO/IEC 27001:2013 standard. Reliable management systems, certified by a third party, play an essential role in Essity’s sustainability work. Essity uses ISO 14001 and the EU’s EcoManagement and Audit Scheme (EMAS) as certified environmental management systems. Many production facilities are certi fied in accordance with ISO and/or EMAS. For design, development and manufacturing of products classi fied as medical devices, Essity has certified relevant quality management systems according to ISO 13485, other sites are certified according to ISO 9001. The company continues to implement ISO 45001 (occupa tional health and safety management systems) to ensure that uniform processes are used and that Essity’s production facilities continuously strive to improve workplacerelated health and safety. Certification, Essity’s main sites1), % 2024 ISO 14001 76 ISO 45001 78 ISO 9001 79 ISO 134852) 100 1) Production volume based. A main site is a production facility that is wholly owned by Essity and that has at least 100 employees. 2) Refers to production facilities that produces for the EU. Timeframe, comparability and restatements Unless otherwise stated, Essity’s sustainability statements 2024 relate to the calendar year ending on December 31, 2024. For Scope 3 emissions, Essity is disclosing information with one year delay as underlying activity data and emission factors are not available at the time of Essity’s reporting. No significant events and changes during 2024 have come to our attention that would require updates of our estimates and calcula tions of Scope 3 emissions. The sustainability statements were published on March 3, 2025. Figures from previous years are included as comparatives in tables or in parentheses. Basis for preparation For reporting purposes, the following time horizons are used: • Short-term – up to 12 months • Medium-term – more than 12 months and up to five years • Long-term – more than five years and up to ten years Essity limits its longterm time horizon to a maximum of ten years since forecasts longer than ten years can be highly uncertain due to various external factors. The following principles and adjustments of environmental and health and safety data for comparative years apply: • Newly acquired businesses are included in current and past reporting as soon as possible • The data from divested companies is excluded in its entirety Historical data for closed production facilities is retained. In those tables where historic information has been adjusted because of the reasons above, this has been stated and explained. Comparative sustainability data not impacted by the previously stated reasons is unchanged. Reported weights are disclosed in metric tons. Changes in the preparation and the presentation of sustainability information are described together with the relevant metrics. When changes occur, Essity explains the changes and why the adjusted replaced metrics provide more useful information. If Essity should not be able to provide revised comparatives this is mentioned together with the relevant metrics. Essity has not identified any material errors in prior periods. The structure and the tonality of the sustain ability statements for 2023 were in line with Essity’s Sustainability Playing Field which defines Essity’s priori ties within social and environmental sustainability. For 2024, structure and tonality have been inspired by the upcoming ESRS reporting standards. I Contents 49Essity | Annual Report 2024Sustainability statements | I – General disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures | Basis for preparation Governance Strategy and business model Impact, risk and opportunity management Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Governance Governance Sustainability statements | I – General disclosures The role of the administrative, management and supervisory bodies The responsibilities of the Board of Directors and Executive Management Team Sustainability is incorporated throughout Essity’s operations and forms an integrated part of the Group’s overall governance. For information about the general duties, composition, diversity and experience of the Board of Directors and the Executive Management Team, see the Corporate Governance Report on pages 104–113. The Board of Directors is the highest governing body overseeing and approving Essity’s strategy which includes sustainability. The double materiality assessment as well as the material sustainability matters and related impacts, risks and opportunities are reported to the Board. The Board approves the Group Sustainability Policy and the Code of Conduct. Other overarching Group policies related to Essity’s material sustainability matters, impacts, risks and opportunities are delegated to Essity’s President and CEO. The CEO is responsible for the daytoday administration of the Group and follows the Board’s guidelines and instructions with the support from the Executive Management Team. The CEO holds the responsibility for the execution of the sustainability strategy and for the implementation of Group policies. This responsibility is further delegated to the relevant function, global unit or business unit respectively. Sustainability governance The purpose, implementation and followup of Essity’s sustainability governance aims to ensure the compa ny’s commitments to its stakeholders, including customers, consumers, employees, suppliers, investors, decisionmakers and representatives from society. The company’s commitments are expressed in strategies, policies, actions and targets. Those that have been established by the Board of Directors are regularly moni tored and reported annually. Delivery on the targets is ensured in the separate responsibility areas. To verify priorities and methods over time, Essity maintains an active and continuous dialogue with internal and exter nal stakeholders. Based on this dialogue, Essity continuously develops its ambitions, strategies and policies to tackle the growing sustainability challenges, for more information see pages 12–24. As sustainability is an integrated part of Essity’s strategy and operations, the sustainability matters, impacts, risks and opportuni ties are covered by internal audits. Essity’s sustainability governance1) Internal and external frameworks and principles Board of Directors Climate Risks Internal Expert Group Climate Targets Steering Committee Compliance Council2) DEI Council Executive Management Team = Crossfunctional working groups that report to the Executive Management Team 1) Significant functions in the company that influence sustainability work. For complete information on corporate governance, see page 104. 2) The Compliance Council also reports regularly to the Board of Directors. Internal auditor External auditor I Contents 50Essity | Annual Report 2024 Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Basis for preparation | Governance Strategy and business model Impact, risk and opportunity management Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Governance Name Content Material sustainability matters1) Scope External initiatives Stakeholder interest and engagement Sustainability Policy Principles for value creation on environmental, social and economic perspectives by offering products that meet customer needs. The company emphasizes the use of renewable and recyclable raw materials as well as the continuous assessment and improvements of the environmental impact of its products throughout their lifecycle. • Climate change • Resource use and circular economy • All fully owned companies • FSC/PEFC • Nature (silent stakeholder) Global RESH Policy (Risk, Environment, Safety and Health) Included topics: • Zero incident mentality • Stakeholders needs and expectations • Identification of risks and opportunities • Protect people, assets, reputation and business continuity • Provide safe and healthy physical and environmental conditions • Protect the environment • Legal compliance • Training programs and continuous improvement • Management systems • Climate change • Water • Own workforce • All activities and all employees, contrac tors and visitors • ISO 14001 • ISO 45001 • Nature (silent stakeholder) • Own employees Fresh Wood-based Fiber Procurement Policy Essity’s requirements on suppliers in relation to the delivery of fresh woodbased fiber materials, including certification, transparency and sustainable forest management practices • Forest and fiber • All fully owned companies and all suppli ers of fresh woodbased fiber materials • FSC/PEFC • Global Diversity Framework • UN Intergovernmental Panel on Climate Change (IPCC) • Nature (silent stakeholder) Global Supplier Standard incl. Supplier Code of Conduct Minimum requirements on suppliers with regards to Code of Conduct, quality, product safety, environment and chemicals • Resource use and circular economy • Management of relationships with suppliers • Workers in the value chain – working conditions • Workers in the value chain – other workrelated rights • All Essity’s suppliers • UN Universal Declaration of Human Rights • ILO Core Conventions • UN Global Compact • UN Guiding Principles on Business and Human Rights (UNGP) • OECD Guidelines for Multinational Enterprises • Vulnerable stakeholders in our upstream supply chain, such as local communities, children, workers including immigrant workers Sustainability-related policies Sustainability-related policies Essity has created several policies to ensure that decisions and actions are consistent across the organiza tion and that legal and regulatory requirements are met. These policies provide clear guidance to Essity’s employees as well as other stakeholders in the value chain on expected behaviors, procedures and best practices and therefore help to reduce exposure to risk by reflecting and reinforcing the company’s values and corporate culture. Essity’s Code of Conduct describes how the company operates, how employees should act and expecta tions stakeholders can have on Essity. It also determines Essity’s commitment to human rights, including children’s rights. The Code of Conduct is also consistent with the UN Convention against Corruption and related legislation. All Essity’s wholly owned subsidiaries are bound by the Code of Conduct. Essity expects its joint ventures to implement a Code of Conduct and guidelines equivalent to those stipulated in Essity’s Code of Conduct. The Supplier Code of Conduct expresses that all suppliers and identified stakeholders upstream in the value chain shall meet set requirements concerning Essity’s commitments regarding responsible business conduct and the material sustainability matters that are addressed in the code. All policies listed below except for the Renumeration Policy have been approved by the Board of Directors or the CEO and have been implemented by the Executive Management Team. The Remuneration Policy is approved at the Annual General Meeting by the shareholders. The policies are reviewed on a yearly basis and are available on essity.com. In addition, Essity has developed position papers stating the company’s views on material sustainability matters. These are available on essity.com/sustainability. I 1) The listed sustainability matters are only covering those matters that were assessed as material in Essity’s double materiality assessment. Contents 51Essity | Annual Report 2024Sustainability statements | I – General disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Basis for preparation | Governance Strategy and business model Impact, risk and opportunity management Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Governance Name Content Material sustainability matters1) Scope External initiatives Stakeholder interest and engagement Business Partner Code of Conduct Requirements on responsible business operations which Essity’s business partners must comply with. It addresses areas of business ethics, human rights, health and safety, employee relations, business practices and community involvement. • Workers in the value chain • Distributors, wholesalers, resellers, sales agents and other business partners • UN Global Compact • UNGP • ILO Core Conventions • Stakeholders in Essity’s downstream value chain Code of Conduct How Essity does business and how we act as employees. The Code of Conduct is outlining what stakeholders can expect from us. • Business conduct – corporate culture • Own workforce – working conditions • Own workforce – equal opportunities • All Essity employees worldwide • UN Global Compact • International Bill of Human Rights • ILO Core Conventions • OECD Guidelines for Multinational Enterprises • Stakeholders in the whole value chain Diversity Policy The policy describes, defines and highlights the importance of diversity, equity and inclusion (DEI). It also includes the prevention and reporting of harassment and discriminatory practices. • Own workforce – equal opportunities • All legal entities within the Group • Catalyst Partnership2) • Leading Executive Advancing Diversity Network (LEAD)2) • Unstereotype Alliance2) • Own employees Anti-bribery and Corruption Policy The rules to be applied at Essity to prevent corruption in all activities under Essity’s control. Essity does not tolerate any form of corruption or bribery and the overall objective is to prevent any manager, board member, agent or person performing services for the company or in Essity’s name, from giving or receiving bribes of any kind. • Business conduct – corruption and bribery • All employees and companies within the Group • UN Convention against corruption • Stakeholders in the whole value chain Human Rights Policy Essity’s principles and commitment to ensure respect for human rights • Business conduct – corporate culture • All legal entities within the Group with the exception of joint ventures • UN Universal Declaration of Human Rights • ILO Core Conventions • UN Global Compact • Vulnerable stakeholders in the whole value chain 1) The listed sustainability matters are only covering those matters that were assessed as material in Essity’s double materiality assessment. 2) See page 84 for more details about these organizations. Sustainability-related policies, cont. Integration of sustainability-related performance in incentive schemes For information on the integration of sustainabilityrelated performance incentive schemes, see pages 145–147. I Contents 52Essity | Annual Report 2024Sustainability statements | I – General disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Basis for preparation | Governance Strategy and business model Impact, risk and opportunity management Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Strategy, business model and value chain For more details on significant groups of products, markets served and headcount of employees by geographic areas and total revenues read pages 28–34. Strategy and relation to sustainability matters Essity’s strategy and sustainability matters are deeply connected. Our purpose is breaking barriers to wellbeing for the benefit of consumers, patients, caregivers and customers across the globe, as well as for the benefit of society and the planet. We aspire to be the undisputed global leader in hygiene and health. Strategy and business model Our strategic framework summarizes our “where to play” and “how to win” choices to enable aspired leadership. We concentrate on the hygiene and health categories, where product performance and brand preference are crucial. We strive for growing positions in North America, Latin America and East Asia while leveraging our positions in Europe. Essity is to be present in all relevant channels for consumers, patients, caregivers and customers. Sustainability matters are built into and addressed in all our “how to win” choices, not only limited to “sustainability”. Strategy Where to play: How to win: Channel OperationsInnovation Sustainability Category People & culture Geography Brand building People & culture: At Essity, our ambition is to create an organization and culture where people and business thrive. We offer safe, attractive, inclusive and sustainable workplaces with committed employees that help break barriers to wellbeing in a unique corporate culture. We focus on growing talents, with a healthy talent flow across functions and organizations. The continuous development of employees and leaders is crucial for Essity’s longterm success and learning and development is a fundamental part of our employee’s every day life. Brand building: Essity has a strong portfolio of leading brands with significant brand equity. By leveraging the impact and broad reach of our brands, we focus on effective marketing campaigns aimed at breaking barriers to wellbeing, build selfesteem of our consumers and remove stigmas in the hygiene and health areas where we operate. Innovation: Innovation at Essity focuses on sustainable innovations that increase hygiene and health stan dards and reduce the company’s environmental impact while contributing to profitable growth. Our target is that at least 50% of Essity’s innovations are to generate social and/or environmental improvements. All our innovations brought to markets fulfill the highest product safety standards. Operations: Essity drives operational efficiency across all aspects of the business through an agile organiza tion focused on continuous improvements. Health and safety of our employees is one of our highest priori ties as is lowering our environmental and climaterelated impact through the whole value chain. Sustainability: Essity’s crossfunctional priorities to drive change in sustainability follow the Sustainability Playing Field. We are breaking barriers and driving societal change in hygiene and health focusing on women+’s health, infection prevention and control, hygiene and sanitation as well as the care economy. We are committed to conduct a responsible business via diversity, equity and inclusion (DEI), occupational health and safety, product safety, business ethics and human rights. When it comes to minimizing our envi ronmental impact, we focus on reducing our emissions along the entire value chain and we are committed to achieve a business with net zero emissions by 2050. We innovate the hygiene and health solutions of the future made from responsibly sourced, recycled and alternative fibers, as well as less fossilbased plastics. We aim to reduce product waste after use. We work to increase water efficiency in our production facilities and aim to reduce water use throughout our products’ life cycles. The Group continuously develops its ambitions, strategies, policies and approaches to tackle the growing sustainability challenges and introduces targets, roadmaps and initiatives accordingly. Strategy and business model I Contents 53Essity | Annual Report 2024Sustainability statements | I – General disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Basis for preparation Governance | Strategy and business model Impact, risk and opportunity management Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Science-based targets Scope 1 & 2 Target 2030 –35% Scope 3 Target 2030 –35% Reduction of absolute greenhouse gas emissions Scope 1, 2 and 3 compared with 2016 Essity’s climateaffecting emissions are divided into three different classes (Scopes) depending on origin. Scope 1 and 2 are directly linked to Essity’s production. Scope 3 reports indirect emissions in Essity’s value chain. Sustainable innovations Target (annual) >50% Share that yielded social and/or environmental improvements Our target for sustainable innovations is that at least 50% of Essity’s innovations will annually yield social and/or environmental improvements. Essity tracks the sales from launched innovations against both social and environmental improvement criteria. Innovations are classified as sustainable if meeting either one or both criteria. Health and safety Target 2025 –75% Decrease in total recordable incident rate compared with 2019 The Total recordable injury (TRI) rate comprises Lost time accidents (LTA), Restricted work cases (RWC) and Medical treatment cases (MTC). All of Essity’s production facilities are conducting p urposeful and systematic work with safety issues. Gender distribution at management levels Target (annual) 40/60% Gender distribution on all management levels is to be between 40% and 60% for each respective gender Essity’s target is that gender distribution at all management levels (Executive Management Team, senior management, middle management) is to be within the interval 40/60%, where the majority group based on gender is to constitute no more than 60%. The target is reported at an aggregate outcome level for the three management levels. Water Target 2032 –25% Reduction of freshwater intake at tissue sites in water-stressed regions In 2024, Essity’s target was set to reduce freshwater intake by 25% at eight tissue sites in waterstressed regions by 2032, using 2022 as the baseline. The target addresses the water consumption at sites with the highest risk of water stress and focuses on reduction of water intake. Fresh fiber Target (annual) 100% Share of FSC – or PEFC-certified fresh fiber Through certifications such as FSC and PEFC, Essity ensures sustainable fiber sourcing, thereby preventing deforestation and promoting biodiversity. Production waste Target 2030 100% Subject to material or energy recovery Resource efficiency and the reduction of waste are important in Essity’s production facilities. The target is that all production waste will be subject to material and energy recovery by 2030, which reduces green house gas emissions. Packaging Target 2025 85% Share of packaging manufactured from renewable and/or recycled material Essity is striving for 100% recyclability and 85% renewable or recycled material in the company’s packaging. This target applies to both paper and plastic packaging for Essity’s brands. Responsible sourcing Target 2025 95% Share of total purchase cost from suppliers that comply with Essity’s Global Supplier Standard Essity has a Global Supplier Standard to ensure responsible business operations and respect for human rights in the company’s supply chain. Business ethics and Code of Conduct Target (annual) 100% Share of new employees who received training in the Code of Conduct The Code of Conduct describes how employees are to act, how the company operates, stakeholder expec tations of Essity and Essity’s commitment to human rights. All wholly owned subsidiaries are bound by the Code of Conduct. Strategy and business model Sustainability targets and assessment of outcome I Contents 54Essity | Annual Report 2024Sustainability statements | I – General disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Basis for preparation Governance | Strategy and business model Impact, risk and opportunity management Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Business and value creation model Business model Essity develops, supplies and sells products, solutions and services that enable superior hygiene and health standards, at home and away from home, by supporting the effectiveness and efficiency of hygiene routines and by preventing, treating and monitoring health conditions. Essity’s business model aims to achieve profit able growth and create additional value in line with its mission. For management purposes, the Group is organized into business areas based on the company’s customer and sales channels which lead to an expansion of the offerings to new and adjacent categories as well as extended service content based on customer and consumer needs. These business areas are Health & Medical, Consumer Goods and Professional Hygiene. For a definition of the operating segments for financial reporting, see Note B2 on page 130. Business areas Essity’s offering in Health & Medical comprises the categories Incontinence Products Health Care and Medical Solutions. The offering includes incontinence products, wound care, compression therapy, orthope dics, skincare products and digital solutions with sensor technology under brands such as TENA, Leukoplast, Cutimed, JOBST, Actimove and DeltaCast. Distribution channels are pharmacies, medical device stores, hospitals, distributors, care institutions and ecommerce. Essity’s offering in Consumer Goods includes the categories Incontinence Products Retail, Feminine Care, Baby Care and Consumer Tissue. The offering includes incontinence products, pads, diapers, wet wipes, skin cream, intimate soaps, leakproof apparel, menstrual cups, toilet paper, household towels, handker chiefs, facial tissues and napkins. The products are sold under brands such as the global leader TENA and other strong brands including Libero, Libresse, Nosotras, Saba, TOM Organic, Lotus, Regio and Tempo. Distribution channels are retail trade and ecommerce. Professional Hygiene comprises complete hygiene solutions, including toilet paper, paper hand towels, napkins, hand soap, hand lotion, hand sanitizers, dispensers, cleaning and wiping products as well as service and maintenance under the globally leading Tork brand. Customers consist of companies and office build ings, healthcare facilities, industries, restaurants, hotels, stadiums and other public venues. Distribution channels are distributors and ecommerce. Resources Essity uses several resources to achieve its mission. The following resources are critical: • Financial capital – In 2024, Essity’s equity amounted to approximately SEK 88.7bn and net debt reached approximately SEK 30.8bn. • Human capital – Essity has been able to use the experience and expertise of 36,000 employees to further develop Essity’s ambitions and achievements. • Intellectual capital – Research and development, patents, licenses, innovations, software, and Essity’s corporate culture are prerequisites for the company’s progress. • Physical capital – Essity uses raw materials, facilities and infrastructure within its production processes. • Natural capital – Forests, energy and water are necessary for Essity’s production processes. Essity aims to reduce its environmental footprint by increasing efficiency and reducing resource use. • Relational resources – The knowledge about people’s daily needs and challenges is the basis for Essity’s product offering which aims to improve people’s wellbeing and quality of life. Cooperation with all of Essity’s key stakeholders is crucial for understanding perspectives, improving decisionmaking and enhancing the overall organizational performance. See the section on stakeholder interests and views on pages 57–58 for further details. Strategy and business model Innovations Essity’s insights into customer and consumer needs and perspectives are key assets that we use to drive sus tainable innovations. Continuous innovations are crucial to improve people’s hygiene, health and wellbeing and contribute to a more sustainable and circular society. Essity has a global unit that works with brands and innovation and has innovation centers in France, Mexico, Sweden, Germany and the USA. The reported costs for research and development in 2024 amounted to SEK 1.9bn, corresponding to about 1.3% of the Group’s net sales. Procurement and manufacturing The innovation process drives manufacturing within Essity which employs responsible sourcing practices. Essity has around 70 production facilities worldwide. Efficiency improvement, which includes digitalization and automation with the aim to achieve a sustainable worldclass production, is a continuous process in these facilities. Marketing and sales Through marketing and sales, Essity strives to build awareness of the company’s brand, purpose and product brands and pursues global and local initiatives to raise awareness and standards for hygiene and health. Leading hygiene and health products, solutions and services Essity produces and sells leading hygiene and health solutions and is the global market leader in inconti nence products with the TENA brand and in professional hygiene with the Tork brand. Value creation for stakeholders Customer and consumer value is created through leading sustainable solutions that provide increased wellbeing and quality of life. Value is created for employees and their families, suppliers, governments, decisionmakers and society through, for example, jobs across the value chain, compensation, tax, increased wellbeing, sustainability work and community engagement. Through dividends and positive development of Essity’s share price, returns are generated for the company’s shareholders. Essity aims to maximize longterm value creation by including financial, environmental and social aspects into all business decisions. Value chain Essity’s value chain assessment forms the basis of our double materiality assessment. A deep understanding of Essity’s activities across the entire value chain is essential for the further analysis of sustainability matters, impacts, risks and opportunities. Essity performed the first value chain assessment in 2023 which was updated in 2024. For this exercise, internal experts were interviewed. The value chain assessment covers the whole value chain: upstream activities, such as those of our suppliers, own operations, as well as downstream activities, such as customer sales. The value chain assessment illustrates the company from a supplier and resource perspective and is therefore based on summarized product segments: Tissue, Personal Care and Medical. I Contents 55Essity | Annual Report 2024Sustainability statements | I – General disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Basis for preparation Governance | Strategy and business model Impact, risk and opportunity management Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Upstream activities Essity is a major purchaser of input materials for its production processes, engaging more than 32,000 suppliers for raw materials, products and services. The materials purchased vary for different product cate gories, with responsibly procured fresh pulp and recovered paper being a key raw material from a Group perspective. In addition, plastic materials are included in Personal Care and Medical products to provide better performance. The remaining upstream activities are of a minor nature in relation to emissions, energy and packaging materials. Over half of Essity’s suppliers are in Europe, a third in North and South America and the remainder in Asia and Africa, indicating the widespread impact Essity might have on workers in the supply chain. Essity adopts a proactive and riskbased approach, in line with OECD guidelines and relevant human rights legislation, in our choice of suppliers and raw materials to guarantee responsible procurement. Own operations The core of Essity’s value chain is its own operations, with production being the driving activity. Nearly 30% of the greenhouse gas emissions along the value chain are derived from Essity’s production. Essity con ducts operations that require various permits for its production facilities. Such operations impact the envi ronment through emissions to air and water, solid waste and noise. Essity has approximately 70 production Strategy and business model facilities in 28 countries worldwide. Production is accompanied by warehousing, sales, marketing, as well as general and administrative activities. Essity also conducts research and development activities to create new and more sustainable products. Around 36,000 employees in about 60 countries are employed by Essity, indi cating the direct impact Essity has on people. See Note B.2.b. on pages 137–138 for a detailed overview of which countries Essity’s workforce is located in. In the year 2024, Essity generated about SEK 146bn revenue. Downstream activities Essity conducts sales in around 150 countries, reaching one billion people daily through our solutions and brands. Service providers who are engaged in product distribution generate emissions and use energy in the distribution process. Most of our products reach consumers via retail businesses and distributors. However, Essity also serves a broad spectrum of other customer and distribution channels. The majority of Essity’s portfolio consists of singleuse products that become waste after usage, ending up in landfill or incinerated with energy recovery. During the use and disposal of most of Essity’s products, water is used, for example, when washing hands or flushing toilet paper. Essity is actively working on moving from a linear to a more circular value chain. Leading products, solutions and services within hygiene and health Responsible marketing and sales Responsible procurement and sustainable manufacturing Sustainable innovations Stakeholder insightsResources Value creation for stakeholders Business model Value chain • Outbound logistics • Distribution • Product use • Disposal: “Reduce, Reuse and Recycle” • Purchase of raw materials and finished goods • Purchase of other goods and services • Inbound logistics • Research and development • Production/manufacturing • Warehousing • Sales and marketing, management and administration Upstream activities Own operations Downstream activities I Contents 56Essity | Annual Report 2024Sustainability statements | I – General disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Basis for preparation Governance | Strategy and business model Impact, risk and opportunity management Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Interests and views of stakeholders How stakeholder views inform Essity’s strategy and business model Stakeholder interests and views are crucial for Essity since they influence Essity’s longterm success. By understanding and addressing stakeholder concerns and questions, Essity builds stronger relationships, mitigates risks, seizes new opportunities and enhances its overall value proposition. Through stakeholder dialogues, stakeholders’ views and expectations are identified, which are integrated into Essity’s strategy and business model. The company’s longterm commitment of reaching net zero emis sions by 2050 as well as the remaining sustainability targets, are the result of ongoing dialogues that are linked to the business strategy, the sustainability strategy and the value creation model. The outcome of the systematic stakeholder dialogues is assessed in the separate responsibility areas. Material views and expectations with impacts on our strategy and business model are reported to the Board of Directors and the Executive Management Team. Stakeholder engagement The table below summarizes how Essity interacts with its key stakeholders. To verify priorities and methods over time, Essity maintains an active and continuous dialogue with internal and external stakeholders. Through the involvement of various internal and external stakeholder experts, the results of Essity’s exchange with key stakeholders are mirrored in Essity’s double materiality assessment. Strategy and business model Employees and their families Suppliers and other business partners Customers and consumers Governments and decision-makers Local communities and society at large Investors and analysts Why we engage Essity strives to create a culture where people thrive through providing opportunities to grow in a safe, sustainable and healthy environment Essity encourages a strong relationship across the company’s network of suppliers, to ensure compliance with the Supplier Code of Conduct and Business Partner Code of Conduct. By doing this, Essity fulfills customer requirements, fosters stable supplier relationships and secures access to sustainable raw materials. By understanding customers’ and consumers’ needs and challenges, Essity ensures the delivery of superior products and solutions that meet those needs Essity strives to anticipate and contribute to public policy (political decisions, legislative framework) to create a favorable business environment and to establish Essity as a credible contributor in matters of public policy and societal interest. Through partnerships Essity’s reputation is enhanced. We strive to be a dedicated partner in the communities in which we operate. By partnering with nongovernmental organizations and civil society organizations we provide education, solutions and resources that empower individuals to participate fully in society at both local and global level. Essity strives for transparency and understanding of the company’s business, strategy, performance, risks and opportunities to facilitate informed decisions among current and potential investors. A proactive and continuous dialogue with investors and analysts allows Essity to capture expectations and questions and to build credibility and trust. Essity provides full and fair disclosure to the market on timely and impartial basis on matters that could affect the value of the Essity share. Key collaboration topics • Health and safety • Business ethics • Social dialogue • Employee wellbeing, experience and engagement • Diversity, Equity and Inclusion (DEI) • Training, development and career path • Code of Conduct • Supplier Code of Conduct • Code of Conduct for Business Partners • Quality of products and services • Supply chain reliability and efficiency • Health and safety • Sustainability management practices • Due diligence, raw material chain of custody • Human rights training • Market share • Brand health • Customers’ and consumers’ insights • Innovation and product development • Quality • Sustainability • Business environment (geo politics, trade, industry competitiveness, digital) • Hygiene and health (care economy, women+’s health, antimicrobial resistance (AMR)) • Environment and Climate Policy • Business environment (geo politics, trade, industry competitiveness, digital) • Hygiene and health (care economy, women+’s health, AMR) • Environment and Climate Policy • Strategy and targets • Financial and business performance • Sustainability related disclosures and performance • Risks and opportunities • Capital structure Interaction with key stakeholders I Contents 57Essity | Annual Report 2024Sustainability statements | I – General disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Basis for preparation Governance | Strategy and business model Impact, risk and opportunity management Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Strategy and business model Employees and their families Suppliers and other business partners Customers and consumers Governments and decision-makers Local communities and society at large Investors and analysts Engagement channels • Whistleblower system managed by external party available 24/7 in more than 25 languages • Ethics and compliance communication • Employee engagement survey • Individual development plans • Global and local newsletters • Messages from the CEO • Continuous constructive dialogues with employee representatives, both globally and locally • DEI initiatives such as Courageous Conversations, DEI leadership boards, DEI councils, DEI working groups • Company’s RESH Committee • Regular selfassessment through Sedex • Regular quality screening, due diligence and collaboration • Climate impact working groups • Capacity building initiatives • Ethical audits • Sales representatives • Website and social media • Consumer inhome visits as well as usage and attitude tests • Consumer contact via phone and email • Brand health surveys • Customer satisfaction ratings • Consumer product testing • Lab testing • Trade shows and exhibitions • Market shares and household panels • Stakeholder platforms and policy maker consultations • Regular meetings, dialogues and events • Position papers and case studies • Industry associations • Dialogue on industry wider topics • Various programs in support of our communities around the world • Partnerships with nongovernmental organizations • Contribution to research projects • Foundations, donations, volunteering and sponsorships • Website and social media • Interim reports and presentations • Press releases, website and social media • Investor conferences and roadshows • Annual General Meeting • Annual report • Capital market days Outcomes • Considering employee perspectives in decisionmaking • Talent management strategy • High awareness of the whistleblower system among employees • Address concerns through dialogues with employee representatives • Essity Learning Compass (internal training platform) • I Care: Our safe and healthy workplace environment • Diversity Policy, DEI strategy and roadmap as well as target progression • Internal policy updates • Compliance with the Supplier Code of Conduct and Code of Conduct for Business Partners • Reduced ethical and human rights risk in the value chain • Longterm relations with likeminded and strategically aligned suppliers • A clear understanding of the needs of Essity’s customers • Clear understanding of the company performance in comparison to competitors • Understand the impact of public policy developments on Essity • Contribute to shape better policy outcome • Early warning to prepare business for impacts from the development of public policy decisions • Support the business in adapting strategies to meet or gain competitive advantages from public policy changes • Position Essity to be able to do any of the above/get government endorsement • Availability of our products, solutions and services where needed • Understand society and public policy development impacts on Essity • Understanding among the investors and analysts of Essity’s business, strategy, performance, opportunities and risks • Understanding in Essity of investors’ and analysts’ views and questions related to Essity’s business, strategy, performance, opportunities and risks Interaction with key stakeholders, cont. I Contents 58Essity | Annual Report 2024Sustainability statements | I – General disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Basis for preparation Governance | Strategy and business model Impact, risk and opportunity management Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Material impacts, risks and opportunities and their interaction with our strategy and business model Essity has identified several sustainability matters in which the company has a significant impact on people and the environment from its own operations or from other parts of the value chain or where risks and oppor tunities linked to sustainability matters have a significant impact on the company’s financial position. For information on how the essential sustainability matters are related to Essity’s strategy and business model, see pages 53–56. In essence, the identified environmental, social and governance matters are all anchored and managed within Essity’s strategic “how to win” pillars. Material sustainability matters, impacts, risks and opportunities Essity’s double materiality assessment concluded that the sustainability matters highlighted in the tables below are material with regards to impacts, risks and opportunities. The identification and assessment of climaterelated risks and opportunities are an integral part of Essity’s strategy development, which has the overall goal of creating a competitive advantage by developing sus tainable innovations. Essity’s operations are affected by increased transparency and design requirements stated in applicable industry directives, resulting in the need to develop its business model accordingly. Essity sees this as an opportunity to promote resourceefficient, low carbon and circular design. It also creates opportunities for new partnerships that enable the development of materials best suited to fit our purpose and achieve our goals. Climaterelated risks and opportunities are evaluated in each business unit and in a centrally coordinated internal expert group that represents key functional competencies for climaterelated matters in Essity. Material impacts related to our own workforce arise through the need for human capital in Essity’s busi ness model, whilst material impacts on workers in the value chain are linked to Essity’s need to purchase raw materials and finished goods as well as other goods and services. A clear positive impact has been identified, linked to Essity’s corporate culture and its approach to supplier management. However, potential negative impacts have been recognized, including risks related to corruption, bribery and the protection of whistleblowers. For information on the identification of material impacts, risks and opportunities and how they were assessed, see page 61. Materiality characteristics E Environmental matters Value chain Material impact Financial effect Assessment Climate change: Adaptation No material impact Potential negative effect (risk) Potential negative financial effect in the form of increased insurance and investments to respond to extreme weather such as heatwaves and flooding. Essity’s dependence on natural resources deriving from forests may be increasingly at risk if climate change continues to evolve over time. Climate change: Mitigation and greenhouse gas emissions Actual negative impact Potential negative effect (risk) Actual negative impact in own operations, upstream and downstream due to greenhouse gas emissions generated in Scopes 1, 2 and 3 which impact climate change. Potential negative financial effect due to transitional climaterelated risks such as regulation. Investments are needed to reduce greenhouse gas emissions, mitigate climate change and secure delivery against Essity’s commitment to net zero emissions. Potential financial risks in increased carbon taxes may trigger further financial impacts. Climate change: Energy Actual negative impact Potential negative effect (risk) Actual negative impact in own operations and upstream due to energyintensive processes where Essity and its suppliers are dependent on energy, both fossilfuel based and renewables, when performing key business activities. Potential negative financial effect from dependencies in the form of price volatility and transitional risks such as energy shortages as well as risks related to regulation. Investments in energy efficiency and resilience may generate negative financial effects over time. Water: Consumption, withdrawals and discharges Actual negative impact Potential negative effect (risk) Actual negative impact in own operations due to water being consumed, withdrawn and discharged in production processes. Potential negative financial effect due to dependencies and physical waterrelated risks such as water scarcity. Biodiversity loss, forest and fiber: Regulatory changes, shortage of fiber and alternative fibers Potential negative impact Potential negative effect (risk) Potential negative impact upstream on forests and ecosystems via wood fiber and pulp sourcing. There is an indirect impact via suppliers if forests are not well managed. The identified risks are deforestation, habitat degradation, climate change, pollution and negative impacts on local communities. Potential negative financial effect with regulatory changes such as the EU Deforestation Directive and KunmingMontreal Global Biodiversity Framework which may negatively impact availability and cost. Circularity: Resource inflows, use of natural resources Actual negative impact No financial effect Actual negative impact upstream due to the use of primary fossil fuelbased plastics and products in Essity’s portfolio that contribute to negative climate impact. Essity’s hygiene and health products include plastics to ensure necessary levels of sanitation, safety and functionality. These plastics end up as waste. Circularity: Resource outflows, products and services Actual negative impact Potential negative effect (risk) Actual negative impact downstream due to sales of consumables that are mostly linear relating to plastic pollution and waste on landfills. Potential negative financial effect related to transitional risks and regulatory changes, for example concerning singleuse products and extended producer responsibility, which leads to increased costs. Strategy and business model Material sustainability matters I Upstream activities Own operations Downstream activities Contents 59Essity | Annual Report 2024Sustainability statements | I – General disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Basis for preparation Governance | Strategy and business model Impact, risk and opportunity management Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Materiality characteristics S Social matters Value chain Material impact Financial effect Assessment Own workforce: Work conditions, health and safety Actual negative impact Potential negative impact No financial effect An actual negative impact on own workforce has been identified due to minor incidents and ergonomic hazards leading to lost time (LTA). Potential negative impact due to the risk of lifethreatening or permanent injuries. Impacts of such scale would be impossible or difficult to remediate. Although incidents of such nature are not likely to take place, Essity assesses health and safety as a material matter since it has a negative impact related to human rights. Own workforce: Equal opportunity, diversity Potential positive impact No financial effect Potential positive impact related to diversity. Essity has several ambitions related to diversity, equity and inclusion that have shown good results. Essity also provides inclu sive leadership trainings for managers, learning and engagement opportunities on diversity, equity and inclusion for all employees and leadership development programs for women in areas where they are underrepresented. Own workforce: Equal opportunity, training and skills development Potential positive impact No financial effect Potential positive impact related to training and skills development. Essity supports continuous personal development through annual performance reviews and individ ual development plans. Essity manages academies that address both leadership and functional capabilities in addition to a range of different mentorship and coaching programs. Own workforce: Equal opportunity, gender equality and equal pay Potential negative impact No financial effect Potential negative impact due to potential genderrelated pay gaps between workers and an underrepresentation of women within the workforce. Essity addresses this by setting a genderrelated target on management level. Workers in the value chain: Work conditions, working time and health and safety Actual negative impact No financial effect Actual negative impact upstream related to working time as well as health and safety. Essity cooperates with suppliers in highrisk countries and highrisk sectors, such as service and logistics, that operate in accordance with our labor rights values. Whilst suppliers in highrisk countries are limited, Essity considers the matter since there is a potential negative human rightsrelated impact that has been concluded material. Workers in the value chain: Other rights and forced labor Potential negative impact No financial effect Potential negative impact upstream due to suppliers operating in highrisk sectors and highrisk countries. Although the number of suppliers is limited, Essity still consid ers its impact as material since the irremediability is higher as Essity only has an indirect influence on its suppliers. Consumers and endusers: Hygiene and health Actual positive impact Actual positive financial effect (opportunity) Actual positive impact related to consumers and endusers. Essity’s products and services help people to live healthier and more active lives with the focus areas being women+’s health, the care economy, hygiene and sanitation as well as infection prevention and control. The impact generates revenue for every product sold and creates an actual financial opportunity. Materiality characteristics G Governance matters Value chain Material impact Financial effect Assessment Governance: Corporate culture Actual positive impact No financial effect Actual positive impact in own operations by creating a positive work environment and corporate culture grounded in common values, procedures and behaviors set in policies and the company’s Code of Conduct. Governance: Protection of whistleblowers Potential negative impact No financial effect Potential negative impact in the whole value chain. Although Essity has an effective whistleblower system that includes the whole value chain, the potential impact is high because eventual incidents might be difficult to remediate. Governance: Management of relationships with suppliers Actual positive impact No financial effect Actual positive impact upstream due to continuous involvement and collaboration with suppliers and traceability and enforcement of Global Supplier Code of Conduct. Corruption and bribery: Prevention, detection, training and incidents Potential negative impact No financial effect Potential negative impact upstream and downstream due to the risk of corruption and bribery in business relationships mainly in highrisk sectors and highrisk countries. Material sustainability matters, cont. Strategy and business modelI Upstream activities Own operations Downstream activities Upstream activities Own operations Downstream activities Contents 60Essity | Annual Report 2024Sustainability statements | I – General disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Basis for preparation Governance | Strategy and business model Impact, risk and opportunity management Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Description of the processes to identify and assess material impacts, risks and opportunities Essity’s initial double materiality assessment was conducted in 2023 and the basis for last year’s sustaina bility reporting. In 2024, all steps of the assessment process were revisited. Essity’s management and key internal stakeholders were consulted in the revisiting of the double materiality assessment. For information about the matters that were identified as being material, see pages 59–60. Impact, risk and opportunity managementI Impact, risk and opportunity management The double materiality process was applied on the time horizons presented on page 49. Essity forecasts the development of its double materiality assessment for the time horizons further in the future to be stable, with a few minor exceptions. 1. Understanding 3. Assessment2. Identification 4. Determination Aim Review and update the previous year’s deep dive into Essity’s business model and value chain to identify key stakeholders, related activities and relevant sustainability matters Identification and description of potential material sustainability matters and their related impacts, risks and opportunities Assessment of Essity’s identified sustainability matters from the perspective of impact and financial materiality based on the insights gained in the preceding steps Determination of material sustainability matters and impacts, risks and opportunities based on a defined threshold Key activities 1.1 Stakeholders – Review identified key stake holders to be engaged in the assessment process 2.1 Identification of impacts, risks and opportunities – Identifying and describing actual and potential material sustainability matters and their related impacts, risks and opportunities based on previously published reports, internal documents, external sources and the input from stakeholders and stakeholder experts 3.1 Impact and financial materiality assess- ment workshops – Quantitative assessment of the identified impacts and financial effects with stakeholder experts. For positive impacts, the scale and the scope of the impact have been considered, the level of irremediability was as well considered for negative impacts. Likelihoods have been analyzed for impacts that were of a potential nature. In addition to the impact materiality assessment, a financial materiality assessment has been performed, scoring the size and the likelihood of identified risks and opportunities. 4.1 Consolidation of assessment results – Aggregation and review of the results to determine Essity’s final list of impacts, risks and opportunities along the value chain 1.2 Value chain analysis – Mapping of Essity’s activities along the value chain (i.e. upstream, own operations and downstream) 4.2 Application of materiality threshold – To further concentrate on the topics most essential to Essity, a materiality threshold has been applied to the identified impacts, risks and opportunities 1.3 Identification of entity-specific disclosures – Analysis of Essity’s business model, previously reported topics and industryspecific sustaina bility matters 2.2 Review of scoring mechanism – The scoring mechanism which has been used in the previous year and is linked to preexisting risk and impact assessments has been reviewed 4.3 Involvement of Executive Management Team and Board of Directors – The aggregated results of the double materiality assessment were validated by the Executive Management Team, discussed with the Audit Committee and subse quently reported to the Board of Directors Double materiality assessment process Stakeholder engagement and validation Contents 61Essity | Annual Report 2024Sustainability statements | I – General disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Basis for preparation Governance Strategy and business model | Impact, risk and opportunity management Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Proportion of turnover from products or services associated with Taxonomy-aligned economic activities – disclosures covering year 2024 2024 Substantial Contribution Criteria DNSH criteria (Do No Significant Harm) Minimum Safeguard (17) Proportion of Taxonomy-aligned (A.1.) or eligible (A.2.) turnover, year 2023 (18) Category enabling activity (19) Category transitional activity (20) Financial Year 2024 Economic Activities (1) Code (2) Turnover (3) Portion of turnover, 2024 (4) Climate Change Mitigation (5) Climate Change Adaptation (6) Water (7) Pollution (8) Circular Economy (9) Biodiversity (10) Climate Change Mitigation (11) Climate Change Adaptation (12) Water (13) Pollution (14) Circular Economy (15) Biodiversity (16) SEKm % Y;N;N/ EL Y;N;N/ EL Y;N;N/ EL Y;N;N/ EL Y;N;N/ EL Y;N;N/ EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned)1) No economic activities – – N/EL N/EL N/EL N/EL N/EL N/EL N N N N N N – – – – Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1.) – – – – – – – – – – – – – – – – Of which Enabling – – – – – – – – – – – – – – – – E Of which Transitional – – – – – – – – – – – T A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)1) No economic activities – – EL,N/EL EL,N/EL EL,N/EL EL,N/EL EL,N/EL EL,N/EL N/EL N/EL N/EL N/EL N/EL N/EL Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2.) – – – – – – – – – A. Turnover of Taxonomy eligible activities (A.1. + A.2.) – – – – – – – – – B. TAXONOMY-NON-ELIGIBLE ACTIVITIES Turnover of Taxonomy-non-eligible activities (B) 145,546 100% TOTAL 145,546 100% For further information on turnover, please refer to the consolidated income statement on page 116 or Note B1 Net sales – Revenues from contracts with customers on page 129. Abbreviations used in the table: Y: Yes, N: No, EL: Taxonomy eligible, N/EL: Not taxonomy eligible, E: Enabling activities, T: Transitional activities. 1) The shaded area is not to be reported in accordance with Delegated Regulation (EU) 2023/2486. The EU taxonomy is a central instrument of the EU’s “Green Deal”. The European Green Deal is a package of policy initiatives, which aims to set the EU on the path of a green transition, with the ultimate goal of reach ing climate neutrality by 2050. Within this package the EU taxonomy is designed to promote investment flows from the finance sector to businesses which contribute the most to the EU’s environmental objectives. For this purpose, environmentally sustainable activities have been defined. According to the EU taxonomy, an economic activity is considered environmentally sustainable if: • it substantially contributes to achieving one or more of the defined environmental objectives, • it does not significantly harm the other environmental objectives, • it is carried out in compliance with the minimum safeguards and • it meets the technical screening criteria defined by the EU Commission by means of delegated acts. Sustainability statements | E – Environmental disclosures EU taxonomy report EU taxonomy reportE Essity’s economic activities can mostly be attributed to the pulp and paper industry. The EU has for this industry and the subordinated economic activities not yet determined any technical screening criteria to define environmentally sustainable economic activities. Consequently, Essity’s turnover, capital expenditure and operating expenditure are not covered by the taxonomy regulation for this accounting period. Nevertheless, Essity is obligated to report on its respective KPIs for turnover, CapEx (capital expenditures) and OpEx (operating expenditures). Based on guidance from the FAR, the institute for the accountancy profession in Sweden, all companies that are required to report on the EU taxonomy must present the first table in Annex 12 of the Nuclear Power and Gas Delegated Act regardless of the company conducting any nuclear/gas activities or not. Essity has no nuclear energy power operations to report. In this report, gas has not been reported as Essity uses gas only for own use. Thus, nuclear power and gas operations are not included in Essity’s key figures. Contents 62Essity | Annual Report 2024 Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures | EU taxonomy report Climate change Water Forest and fiber Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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EU taxonomy reportE Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities – disclosures covering year 2024 2024 Substantial Contribution Criteria DNSH criteria (Do No Significant Harm) Minimum Safeguard (17) Proportion of Taxonomy-aligned (A.1.) or eligible (A.2.) CapEx, year 2023 (18) Category enabling activity (19) Category transitional activity (20) Financial Year 2024 Economic Activities (1) Code (2) CapEx (3) Portion of CapEx, 2024 (4) Climate Change Mitigation (5) Climate Change Adaptation (6) Water (7) Pollution (8) Circular Economy (9) Biodiversity (10) Climate Change Mitigation (11) Climate Change Adaptation (12) Water (13) Pollution (14) Circular Economy (15) Biodiversity (16) SEKm % Y;N;N/ EL Y;N;N/ EL Y;N;N/ EL Y;N;N/ EL Y;N;N/ EL Y;N;N/ EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned)1) No economic activities – – N/EL N/EL N/EL N/EL N/EL N/EL N N N N N N – – – – CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1.) – – – – – – – – – – – – – – – – Of which Enabling – – – – – – – – – – – – – – – – E Of which Transitional – – – – – – – – – – – T A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)1) No economic activities – – EL,N/EL EL,N/EL EL,N/EL EL,N/EL EL,N/EL EL,N/EL N/EL N/EL N/EL N/EL N/EL N/EL CapEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2.) – – – – – – – – – A. CapEx of Taxonomy eligible activities (A.1. + A.2.) – – – – – – – – – B. TAXONOMY-NON-ELIGIBLE ACTIVITIES CapEx of Taxonomy-non-eligible activities 8,543 100% TOTAL 8,543 100% The key figure for capital expenditure comprises investments in intangible asset SEK 498m, in property, plant and equipment of SEK 6,904m and additions to right-of-use assets of SEK 1,141m. Refer to Notes D1, D2 and G1 on pages 151, 153 and 171. Abbreviations used in the table: Y: Yes, N: No, EL: Taxonomy eligible, N/EL: Not taxonomy eligible, E: Enabling activities, T: Transitional activities. 1) The shaded area is not to be reported in accordance with Delegated Regulation (EU) 2023/2486. Contents 63Essity | Annual Report 2024Sustainability statements | E – Environmental disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures | EU taxonomy report Climate change Water Forest and fiber Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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EU taxonomy reportE Proportion of OpEx from products or services associated with economic activities – disclosures covering year 2024 2024 Substantial Contribution Criteria DNSH criteria (Do No Significant Harm) Minimum Safeguard (17) Proportion of Taxonomy-aligned (A.1.) or eligible (A.2.) OpEx, year 2023 (18) Category enabling activity (19) Category transitional activity (20) Financial Year 2024 Economic Activities (1) Code (2) OpEx (3) Portion of OpEx, 2024 (4) Climate Change Mitigation (5) Climate Change Adaptation (6) Water (7) Pollution (8) Circular Economy (9) Biodiversity (10) Climate Change Mitigation (11) Climate Change Adaptation (12) Water (13) Pollution (14) Circular Economy (15) Biodiversity (16) SEKm % Y;N;N/ EL Y;N;N/ EL Y;N;N/ EL Y;N;N/ EL Y;N;N/ EL Y;N;N/ EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T A. TAXONOMY-ELIGIBLE ACTIVITIES A.1. Environmentally sustainable activities (Taxonomy-aligned)1) No economic activities – – N/EL N/EL N/EL N/EL N/EL N/EL N N N N N N – – – – OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1.) – – – – – – – – – – – – – – – – Of which Enabling – – – – – – – – – – – – – – – – E Of which Transitional – – – – – – – – – – – T A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)1) No economic activities – – EL,N/EL EL,N/EL EL,N/EL EL,N/EL EL,N/EL EL,N/EL N/EL N/EL N/EL N/EL N/EL N/EL OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2.) – – – – – – – – – Total (A.1. + A.2.) – – – – – – – – – B. TAXONOMY-NON-ELIGIBLE ACTIVITIES OpEx of Taxonomy-non-eligible activities 5,523 100% TOTAL 5,523 100% Applies to costs for research and development as well as short-term leases where the underlying assets have a low value. Abbreviations used in the table: Y: Yes, N: No, EL: Taxonomy eligible, N/EL: Not taxonomy eligible, E: Enabling activities, T: Transitional activities. 1) The shaded area is not to be reported in accordance with Delegated Regulation (EU) 2023/2486. Contents 64Essity | Annual Report 2024Sustainability statements | E – Environmental disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures | EU taxonomy report Climate change Water Forest and fiber Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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EU taxonomy reportE Nuclear and fossil gas related activities Nuclear energy related activities YES/NO The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle. NO The undertaking carries out, funds or has exposure to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies. NO The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades. NO Fossil gas related activities YES/NO The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels. NO The undertaking carries out, funds or has exposures to construction, refurbishment and operation of combined heat/cool and power generation facilities using fossil gaseous fuels. NO The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/ cool using fossil gaseous fuels. NO Contents 65Essity | Annual Report 2024Sustainability statements | E – Environmental disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures | EU taxonomy report Climate change Water Forest and fiber Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Climate changeE Sustainability matters Value chain Material impact Financial effect Climate change adaptation No impact Potential negative effect (transitional risk) Climate change mitigation Actual negative impact Potential negative effect (physical and transitional risk) Energy Actual negative impact Potential negative effect (physical and transitional risk) Governance Integration of sustainability-related performance incentive schemes For information on the integration of climaterelated targets in incentive programs, see page 145. Strategy Transition plan for climate change mitigation Resource consumption, consequential climate change and sustainability challenges are all deeply inter connected with farreaching impacts on communities and businesses. Essity has initiated work on a compre hensive transition plan to achieve net zero emissions by 2050, consisting of eight key action areas. Building a sustainable future requires collective action. Essity is wellpositioned, through its scale and reach, to contrib ute to the net zero transformation and address this global challenge. Why combating climate change matters Greenhouse gas emissions drive rising global temperatures, leading to severe environmental conse quences such as glacial melting, rising sea levels, extreme weather events and biodiversity loss. About 30% of Essity’s greenhouse gas emissions originate from our own production. Reducing emissions from our own operations and throughout our entire value chain is a priority. Essity has the scale and reach to act and contribute to a collective transformation, which is crucial to prevent the severe global effects on indi viduals, Essity’s business and societies. Climate change Aligned with the Paris Agreement Essity’s ambition is consolidated in an initial climate transition plan that continuously evolves. The ambition is accompanied by sciencebased targets for Scope 1, 2 and 3, which have been validated by the Science Based Targets initiative (SBTi). This means that the targets are aligned with the ambitions of the Paris Agree ment to limit global warming to 1.5°C above preindustrial levels. Essity’s plans to achieve net zero emissions by 2050 and its nearterm emissions targets by 2030 were approved by the Executive Management team and the Board of Directors. Each business area contributes to the delivery of the sciencebased targets along specific roadmaps with key focus areas according to the highest environmental impact of the respective area of the business. A central steering group is established, coordinating activities and continuously tracking progress. Upstream activities Own operations Downstream activities Journey to net zero emissions– climate transition 2016 base year 2024 Net Zero emissions 2050 Less waste after use Zero Production waste Clean transpor- tation Low-carbon materials Fossil-fuel free production Scope 1 and 2 Emission reductions Achieved 2024 Growth Enabling action areas Sustainable innovations Resource efficiencyBreakthrough technology Illustration of climate transition plan Contents 66Essity | Annual Report 2024Sustainability statements | E – Environmental disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report | Climate change Water Forest and fiber Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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• Breakthrough technology – Essity explores future tissue technology to reduce resources such as water and energy currently used in tissue production. • Zero production waste – To reduce waste to landfill by increasing the recovery and recycling of our production waste, Essity turns, where possible, production waste into a valuable resource. • Clean transportation – Sustainability is integrated into Essity’s global transportation model. Emission factors are used as criteria for optimizing load planning and carrier selection. • Less waste after use – We take action to reduce waste after use through our packaging commitments and by innovating recycling processes to create new life after use. For information on our progress towards implementing the transition plan, see pages 70–71. Compliance with EU Paris-aligned benchmarks Based on available information, Essity is not excluded from any EU Parisaligned benchmarks since the nature of Essity’s business is not defined by any of the exclusion criteria. Climate changeE Near Term 2030 emissions target, scope Long Term Net Zero 2050 emissions target, scope Essity‘s greenhouse gas emissions inventory (10.1 million ton CO2e, base year 2016) 20% Rest of Scope 3 inventory 16% Key raw materials 3% Inbound transports 30% Fuel, electricity and purchased steam used in production 3% Production waste 5% Outbound transports 23% Consumer waste after use Scope 1 & 2Scope 3 Scope 3 The climate transition plan to reduce Essity’s greenhouse gas emissions and achieve our targets, consists of the following eight key action areas: • Sustainable innovations – We develop products and solutions that require less material and that use low carbon materials in their production. Our key strategies focus on reusable products and designing to reduce consumption. • Low-carbon materials – Essity strives to use materials resulting in lower greenhouse gas emissions. The largest share of greenhouse gas emissions from purchased raw materials is from fresh fiber, and fossil fuelbased plastic used in our products and packaging. Here, collaborations with suppliers aiming to encourage them to increase usage of renewable energy and develop renewable products is key. • Fossil fuel free tissue production – Because our tissue manufacturing is an energyintensive process, transitioning to fossil fuel free tissue production is one of our most crucial tasks for achieving net zero emissions by 2050. • Resource efficiency – Essity has extensive experience working with resource efficiency across the value chain, including our MSave and ESave programs that are focused on material and energy efficiency in our production process. Contents 67Essity | Annual Report 2024Sustainability statements | E – Environmental disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report | Climate change Water Forest and fiber Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Climate changeE We have come far and we will not stop here A healthy environment is crucial for the wellbeing of individuals and communities. Essity, therefore, strives to meet the increasing demand for hygiene and health while minimizing the climaterelated foot print through the entire value chain. Our success depends on adapting to climate change, mitigating climate impact throughout the value chain and becoming energy efficient. We must reduce emissions to secure longterm commercial viability. This includes reusing and sourcing new renewable raw materials, optimizing production to use fewer resources, improving transportation efficiency and adopting reusable or recyclable packaging. By minimizing material use, embracing innovative designs and prioritizing recycling, we can reduce waste and contribute to a more sustainable future. Material impacts, risks and opportunities and their interaction with our strategy and business model Climate change adaptation Essity has identified a potential negative financial risk in the form of increased insurance costs and increased investments, as a response to extreme weather such as heatwaves and flooding. Essity is dependent on natural resources, of which especially forests, may be at risk if climate change continues to evolve over time. Inability to reduce greenhouse gas emissions may lead to increased restrictions and/or taxes on emissions that could impact overall costs. Potential changes in consumption patterns may negatively affect future income. Climate change mitigation There is an actual negative impact regarding climate change mitigation in Essity’s own operations and in activities along the full value chain as these emits greenhouse gas emissions. Transitional climate change risks such as regulations can potentially have a negative financial effect. To mitigate climate change, addi tional investments are needed to reduce greenhouse gas emissions and to continue to deliver on Essity’s commitments to achieve net zero. Essity’s commitment to achieve net zero emissions by 2050 is accompanied by sciencebased targets for Scope 1, 2 and 3, encompassing the entire value chain. Not achieving these targets constitutes a risk for Essity, potentially resulting in reputational loss and/or revenue losses. It may also lead to challenges in connection with raising and gaining access to capital and financing. Energy Energyintensive processes in the operations for Essity and our suppliers result in an actual negative impact on our own operations and our upstream value chain. Dependencies on energy can lead to price volatility and transitional risks, which potentially can lead to negative financial effects, for example related to new regulations. Investments in energy transition may lead to negative financial effects on the operations. There are opportunities for Essity to increase energy efficiency during the production phase and use fossil free energy to limit emissions. Greenhouse gas emissions in the value chain can be reduced by focus ing on the design of products and waste after use. These measures pose opportunities to attract customers and consumers through new products while maintaining performance with a reduced carbon footprint. Essity’s strategy is aligned with the global trend of policymakers implementing increasingly rigorous climate targets and demands, while promoting a significant increase in investment in fossilfree energy. Essity must commit to progressively increase efforts to meet more ambitious climate targets. We continue to execute our energy transition according to the sciencebased targets. For additional information on material impacts, risks and opportunities, see pages 59–60. Impact, risk and opportunity management Description of the processes to identify and assess material climate-related impacts, risks and opportunities Essity’s detailed climaterisk analysis is based on the recommendations of the framework of the Task Force on Climaterelated Financial Disclosures (TCFD) and it was first conducted in 2020. In 2022, a more indepth scenario analysis was conducted based on two different climate scenarios, valid for the operations as well as for business continuity. This is performed with a tenyear perspective to enable identification of longterm strategic actions and priorities. Conclusions from the climaterisk analysis have been continuously confirmed. The two key scenarios are: • Scenario 1 – Global warming of 1.5°C • Scenario 2 – Global warming of 4°C The climaterisk analysis has informed the development of the transition plan for climate change as well as the activities and roadmaps related to the eight key action areas. It has also had an impact on Essity’s strategy and the Sustainability Playing Field. Contents 68Essity | Annual Report 2024Sustainability statements | E – Environmental disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report | Climate change Water Forest and fiber Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Climate changeE Scenario 2: Global warming of 4°C2) In this scenario, global warming will reach 4°C by 2100, for example, due to the failure to effectively reduce emissions and other negative environmental impacts. Extreme weather becomes more frequent, with rising sea levels, and the progressing of desertification and deforestation. Sea levels continue to rise, desertifica tion and deforestation continue. Access to key resources such as raw materials, energy, water and food declines, resulting in greater volatility and uncertainty for prices and food security. Risks Description and impacts • Extreme weather Extreme weather and the continued rise of carbon emissions into the atmosphere may impact Essity’s business in areas such as: • Water scarcity and excessively high water temperatures impacting production stability and operational costs • Rising insurance costs and costs for reconstruction following extreme weather • Increased investments required to safeguard stable production and supply chain • Deforestation continues and forest fires limit availability of good quality certified wood fiber, impacting prices negatively and leading to raw material shortages • Lower living standards and changed consumption behavior • Permanent scarcity of natural resources, raw materials, energy and water may require site closures in specific areas and generally lead to higher prices for raw materials, energy, water and distribution • Increasing amount of waste to be managed by communities and countries will impose higher waste costs • Without bans, plastic use continues to increase, resulting in higher costs • Frequent shifts in the political landscape and regulations may impact cost of compliance and conducting business • Permanent shortage of key raw materials and access to water • Linear consumption patterns continue • Dynamic and globally disharmonized regula tory landscape Opportunities Description and impacts • Competitive advantage • Safeguarded production and sourcing in regions at risk builds trust in and loyalty to Essity’s brands• Leading hygiene and health solutions are prioritized Essity’s overall approach to identify and assess material climaterelated impacts, risks and opportunities is described on page 61. Scenario 1: Global warming of 1.5°C1) In this scenario, global warming is limited to no more than 1.5°C by 2100 through, for example, global collab oration between governments, industries, companies and individuals pushing for tougher legislation, green innovations and rising demand for environmentally friendly products, solutions and services. Carbon emis sions are strictly limited, and carbon tax is extended, which promotes processes with lowcarbon emissions and greater use of circularity for materials and products. Risks Description and impacts • Shifting regulatory landscape Transitional effects will impose stricter legislation for manufacturing processes, energy sources and material use: • Increased restrictions on carbon emissions through raised carbon taxes impact overall operational costs • Limitations or stricter postuse solutions for singleuse products to reduce waste impact operational costs • Limitations on water use in production impacts production costs • Consumer behavior and preferences move toward lower use of plastics • Continued increase in demand leads to shortage of fresh woodbased fiber, in turn resulting in raw materials shortages and increased prices for raw materials • Changed consumption patterns • Shortage of green energy and sustainable materials Opportunities Description and impacts • Development of new business models • Competitive advantages through Essity’s longterm and robust efforts to achieve lower resource use, innovative production methods and lower carbon emissions • Customers, consumers, investors and employees are attracted by changed consumption patterns in the form of increased demand for sustainable solutions with a lower carbon footprint, where companies with a strong sustainability profile are rewarded for their investments in and develop ment of new business models and environmentally conscious solutions • Sustainable innovations 1) The scenario includes consideration of Shared Socioeconomic Pathways (SSP) scenarios 1-1.9 and the International Panel for Climate Change (IPCC) scenario (RCP scenario 2.6). 2) The scenario includes consideration of Shared Socioeconomic Pathways (SSP) scenarios 3-7.0 and the International Panel for Climate Change (IPCC) scenario (RCP scenario 6-8.5). Contents 69Essity | Annual Report 2024Sustainability statements | E – Environmental disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report | Climate change Water Forest and fiber Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Climate changeE Policies related to climate change mitigation and adaptation Activities related to climate change adaptation, climate change mitigation and energy are aligned with several governing documents and policies such as Essity’s Sustainability Policy, the GHG Accounting Manual, the Fresh Woodbased Fiber Procurement Policy and the Code of Conduct. Essity’s Sustainability Policy defines the Group’s commitment to environmental, social and economic value creation. Essity continuously reviews and challenges its targets to reduce its global impact on the climate. We promote appropriate, recognized environmental management systems throughout the organi zation. Essity has a longterm commitment to sustainable forestry practices and preservation of biological diversity to contribute to the limiting of climate change. Through responsible fiber sourcing Essity ensures that none of the wood fiber in the Group’s products stems from controversial sources. All fresh wood fiber based raw material in our products should be FSC or PEFC certified or fulfill the FSC standard for controlled wood. The Essity GHG Accounting Manual outlines the accounting and reporting approach for Scope 1, 2 and 3 greenhouse gas emissions for Essity at a corporate inventory level to implement the requirements of the GHG Protocol Corporate Accounting and Reporting Standard and the Corporate Value Chain (Scope 3) Standard. The GHG Accounting Manual is owned and approved by Group Finance and material changes are brought to the Audit Committee. To ensure longterm success in a competitive and increasingly regulated environment, Essity conducts assessments and maps various greenhouse gas risks. Essity’s efforts regarding its corporate greenhouse gas inventory serves several business goals, including but not limited to: • Managing greenhouse gas risks and identifying reduction opportunities • Participation in emission trading programs such as EU and UK ETS • Public reporting and participation in voluntary greenhouse gas programs and initiatives such as the CDP and SBTi • Mandatory reporting, such as ESRS and the EU Taxonomy The Sustainability Policy and the GHG Accounting Manual are implemented throughout Essity. For informa tion on Essity’s Sustainability Policy, see page 51. Actions and resources in relation to climate change policies Essity is well on track to deliver absolute emission reductions of 35% for Scope 1 and 2 as part of its SBTi validated nearterm targets. During 2024, Essity continued its efforts on global sharing, implementing best practices and digital followup of resource efficiency across production facilities. We also made major investments in stateoftheart technology, such as heat and fiber recovery, and improved process controls and equipment. Essity has an extensive plan which includes the capital expenditure and operating expenditure outputs that will be required for the implementation of planned actions and required resources. Sustainable innovations Through continuous development and improvements, Essity has reduced the carbon footprint of the com pany’s different product offerings by up to 47% over a 15year period in Europe. Essity’s Group target is that at least 50% of the company’s innovations are to yield social and/or environmental improvements. In 2024, the combined outcome was 87%, where several innovations met both social and environmental improvements. The environmental innovations in isolation accounted for 55%. Essity supports sustainable consumption through different activities. These include the expansion of reusable products, solutions and services that reduce volume consumption, such as absorbent underwear for menstrual health and incontinence, and digital services like the TENA SmartCare Change Indicator. Low-carbon materials We collaborate with our suppliers to develop sustainable products from alternative, renewable and recycled materials and encourage them to establish their own climate targets and increase the use of renewable energy. Fossil fuel free tissue production To achieve net zero emissions by 2050, Essity is taking measures that include the increased use of lowcarbon hydrogen, biomass, biogas, geothermal steam, solar power and electrification for our tissue production processes. In 2023, by using renewable hydrogen at the production facility in MainzKostheim, Germany, we became the first company in the industry to produce tissue in a carbonfree production process. By completely replacing natural gas with biogas and shifting to certified renewable electricity, our Lilla Edet production facility in Sweden reduced its CO2 emissions to zero during normal production, becoming the world’s first largescale tissue production facility capable of carbonfree production. In 2024, among several other investments, we commissioned the world’s first tissue production machine operating on geothermal steam in Kawerau, New Zealand. Resource efficiency Essity reduced greenhouse gas emissions per ton produced by 25% between 2005 and 2024, in part because of our MSave and ESave programs. We have also made major investments in stateoftheart technology, such as heat and fiber recovery, and improved process controls and equipment. Breakthrough technology Since 2021, Essity has been manufacturing tissue using pulp made from wheat straw, and in 2022 we launched our first products containing wheat straw. Essity’s facility in Mannheim, Germany, is the world’s first facility in the tissue industry to use these agricultural byproducts for largescale production, which reduces the environmental impact by 20% compared to fresh fiber or recycled fiber. Zero production waste Some of the production waste byproducts can be sold to other industries as a potential resource inflow. Essity is investing in waste valorization research and pilot projects to treat and transform the current produc tion waste streams into more reusable forms, contributing to zero production waste. Clean transportation Within logistics we partner with our service providers to shift towards lowemission transportation options. We reduce emissions in our transportation network by maximizing loadfill, optimizing routes and transpor tation modes. Essity has continuously been introducing low emission vehicles such as multifuel vehicles using liquified natural gas, electricity and hydrotreated vegetable oil into our operations based on market availability. Contents 70Essity | Annual Report 2024Sustainability statements | E – Environmental disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report | Climate change Water Forest and fiber Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Less waste after use To reduce waste from our products and packaging across the entire life cycle, we follow our principles Reduce, Reuse and Recycle. In 2024, we continued to develop and launch our assortment of reusable and hybrid products. Within Feminine Care, fossilfree and plasticfree day pads, night pads, and panty liners were launched, resulting in a lower climate impact. In Consumer Tissue, a compostable household paper was introduced, and in Professional Hygiene, Tork OptiServe® Coreless was launched—a new toilet paper system focused on efficiency, sustainability, and an improved user experience. Collaborations to reduce environmental impact Essity works with various key stakeholders, such as public authorities or other policymakers. These include the EU and OECD, intergovernmental organizations and nongovernmental organizations such as the Ellen MacArthur Foundation and the SBTi. Essity joined the UN Global Compact’s Business Ambition for 1.5°C in 2021. The CDP, World Resources Institute and World Wide Fund for Nature support the plat form. It allows collaboration between companies and critical stakeholders to address climate change mitigation and adaptation. Metrics and targets Targets related to climate change mitigation and adaptation Essity’s overall ambition to achieve net zero greenhouse gas emissions throughout the value chain by 2050 is applicable to wholly owned companies. Essity’s energy efficiency program, ESave, will remain a corner stone of the company’s work to reduce energy use and emissions. It is strongly linked to our commitment to sciencebased targets for Scopes 1 and 2. We have set the following targets to achieve net zero greenhouse gas emissions throughout our value chain by 2050: • Nearterm absolute emissions reduction targets to reduce our Scope 1 and 2 emissions by 35% and Scope 3 emissions by 35% by 2030, relative to a 2016 baseline • A longterm commitment to achieve net zero emissions covering Scope 1 and 2 and Scope 3 by 2050 in absolute terms Essity’s climateaffecting emissions are divided into three different Scopes depending on origin. Scope 1 and 2 are directly and indirectly linked to Essity’s production. Scope 3 reports other indirect emissions in Essity’s value chain. Our nearterm target for Scope 1 and 2 is aligned with the SBTi WB2C (wellbelow 2°C) pathway. For Scope 1 and 2, both the nearterm 2030 and longterm 2050 target has the same scope and boundary. Essity’s Nearterm Scope 3 sciencebased target applies to the most important emission catego ries: key purchased raw materials and branded packaging, incoming and outgoing transportation, waste from the company’s own production and product waste after use. These categories represent most of the total Scope 3 emissions in the value chain. Essity’s sciencebased targets for reduction of greenhouse gas emissions conform with the SBTi’s Corporate NetZero Standard and have been validated by SBTi, aligning with the Paris Agreement to limit global warming to 1.5°C above preindustrial levels. Climate changeE Sustainability targets and assessment of outcome Energy consumption and mix Energy efficiency, breakthrough technologies and the increased use of renewable energy are required to achieve Essity’s targets. Energy sources currently necessary for production include electricity, whether purchased or generated onsite, fuels such as fossil fuels and biomass, and purchased steam. The amount of these energy sources consumed in production is monitored and the data is used in emissions calculations. Surplus heat is created during the onsite combustion of fuel, some of which is reused by Essity in production processes, while a minor share is sold externally. The majority of Essity’s energy demand, both fuel and electricity, is for tissue production. Electricity is the primary energy source used to produce products in the personal care (Incontinence Products, Feminine Care and Baby Care) and Medical Solutions product categories. European personal care production facilities have purchased certified renewable electricity with guarantee of origin certificates since 2020. Science-based emissions targets, near-term Scope 1 and 2 Target 2030: –35% Outcome: –27% Scope 31) Target 2030: –35% Outcome: –21%2) 1) Essity’s near-term Scope 3 science-based target applies to the most important emission categories: key purchased raw materials and branded packaging, incoming and outgoing transportation, waste from the company’s own production and product waste after use. 2) Outcome in 2023. 0 1 2 3 4 2024202320222016 Scope 1 Scope 2 3.1 2.5 2.22.2 Million tons CO2e Outcome 2016–2024: –27% Scope 3 Million tons CO2e 0 1 2 3 4 5 6 7 202320222016 4.04.65.1 –21% Contents 71Essity | Annual Report 2024Sustainability statements | E – Environmental disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report | Climate change Water Forest and fiber Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Climate changeE Gross Scope 1, 2 and Scope 3 and total greenhouse gas emissions Essity calculates its greenhouse gas emissions across Scope 1, 2 and Scope 3. We employ the operational control approach in line with the GHG Protocol. Scope 1 and 2 emissions involve calculations directly linked to Essity’s production facilities and include direct emissions from fuel consumption (Scope 1) and indirect emissions from the use of purchased energy (Scope 2). Scope 3 consists of estimated indirect emissions in Essity’s upstream and downstream value chain and are reported with a oneyear delay to enable data colla tion from the value chain. The reported data for Scope 1 is based on onsite fuel use with associated emission factors. For Scope 2, data for emissions from electricity is calculated and disclosed according to location and marketbased methodology, using countries’ relevant grid mix emission factors for the two methods. Essity’s data for emis sions from purchased steam is calculated based on the fuel used by the suppliers to generate the steam. The calculation of greenhouse gas emissions for Scope 1, 2 and estimations for Scope 3, as well as prog ress tracking toward Essity’s sciencebased targets, encompasses carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O). Emission factors used: • Greenhouse gas emissions from incineration are calculated using emission factors for the fuel’s thermal value. Source: IPCC Guidelines 2006 (Scope 1 emissions) • Greenhouse gas emissions from purchased electricity are calculated using the country’s emission factor published by the International Energy Agency (IEA), 2021 (Scope 2 emissions, locationbased and marketbased) For the Nearterm emissions target for Scope 1 and 2, the emissionsreduction outcome in 2024 was –27% and for Scope 3, the emissions reduction outcome in 2023 was –21%, all measured against the base year 2016. For production waste to landfill, the waste streams containing fiber, such as deinking residuals and rejects from wastepaper, are reported into a centralized system that applies an emission factor to the disposed dry fiber portion. This emission factor is based on national averages considering incineration and landfilling practices, including methane capture in each area. For the other key Scope 3 emissions categories, Essity conducts estimates of emissions using the compa ny’s data from purchased, transported, produced and sold volumes, known as primary data. The emission factors are obtained through thirdparty information from suppliers and service providers in manufacturing and transportation, as well as from publicly available statistics for waste management systems. Essity’s restatement principles are in line with the GHG Protocol. Prior year adjustments are made due to structural changes, such as acquisitions and divestments, improved or updated methodology and updated data from thirdparty suppliers. Contents 72Essity | Annual Report 2024Sustainability statements | E – Environmental disclosures Energy 2024 2023 2022 2021 2020 Production, kton 3,276 3,261 3,504 3,410 3,508 Purchased electricity, GWh 3,881 3,838 4,192 4,041 4,062 Renewable electricity purchased 772 614 378 345 402 Grid electricity purchased 3,109 3,224 3,814 3,696 3,660 Photovoltaic electricity generated, GWh 9 1 – – – Purchased Heat/steam, GWh 219 233 182 195 206 Heat/steam renewable 70 82 87 90 96 Geothermal steam 71 83 68 75 70 Heat/steam non-renewable 78 68 27 30 40 Total fuels, GWh 7,088 7,132 7,845 7,767 7,884 Biofuels 1,080 1,081 1,181 1,178 1,129 of which wood fuels 176 168 188 197 161 of which black liquor 773 787 862 901 884 of which other biofuels 131 126 131 80 84 Fossil fuels 6,008 6,051 6,664 6,589 6,755 of which natural gas 5,873 5,908 6,502 6,300 6,463 of which coal 6 5 6 159 164 of which oil 122 131 148 123 123 of which other fossil fuels 7 7 8 7 5 Total energy (gross), GWh 11,197 11,204 12,219 12,003 12,153 Total renewable energy (gross) 2,002 1,861 1,713 1,688 1,697 Total non-renewable energy and grid electricity (gross) 9,195 9,343 10,506 10,315 10,456 Energy sold, GWh 149 45 251 249 248 Renewable energy sold 40 0 135 166 167 Non-renewable energy sold 109 45 116 83 81 Total energy (net), GWh 11,048 11,159 11,968 11,754 11,905 Total renewable energy 1,962 1,861 1,578 1,522 1,530 Total non-renewable energy 9,086 9,298 10,390 10,232 10,375 Energy intensity, GWh/kton 3.372 3.448 3.416 3.447 3.393 Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report | Climate change Water Forest and fiber Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Climate changeE Greenhouse gas (GHG) emissions, kton CO2e 2024 2023 2022 2021 2020 2016 (Target Base year) Scope 1 GHG emissions Gross Scope 1 GHG emissions 1,230 1,239 1,365 1,371 1,406 1,539 Scope 1 GHG emissions from regulated emissions trading schemes, % 59 59 61 59 59 Scope 1 GHG emissions reduction (as of emissions of base year), % 20 19 11 11 9 Scope 2 GHG emissions Gross market-based Scope 2 GHG emissions 1,219 1,267 1,496 1,353 1,273 1,819 Scope 2 GHG emissions (market-based) reduction (as of emissions of base year), % 33 30 18 26 30 Gross location-based Scope 2 GHG emissions 1,011 993 1,154 1,203 1,270 1,513 Scope 2 GHG emissions (location-based) reduction (as of emissions of base year), % 33 34 24 20 16 Total Scope 1 and 2 (location-based) GHG emissions 2,241 2,232 2,519 2,574 2,676 3,052 whereof CO2 2,233 2,224 2,510 2,565 2,667 3,042 whereof N2O 4 4 4 4 4 5 whereof CH4 4 4 5 5 5 5 Prior year adjustment1) –13 89 184 254 Total Scope 1 and 2 GHG emissions (location-based) reduction (as of emissions of base year), % 27 27 17 16 12 1) Updates of emission factors for Scope 2 (location-based) and minor corrections. Scope 3 GHG emissions, kton CO2e 2023 2022 2016 Significant Scope 3 GHG emissions, corresponding to SBTi Near-term target 2030 Total indirect (Scope 3) GHG emissions 3,996 4,540 5,050 whereof SC 3.1 Purchased goods and services (key raw materials) 1,235 1,369 1,608 whereof SC 3.4 Upstream transport 712 815 861 whereof SC 3.5 Production waste 146 179 277 whereof SC 3.12 End-of-life treatment of sold products 1,903 2,177 2,304 Scope 3 GHG emissions reduction, Near-term target 2030 scope, % 21 10 Other Scope 3 GHG emissions, included in Long-term SBTi target 2050 2,139 2,117 2,003 Total Scope 3 GHG emissions 6,135 6,657 7,053 Total Scope 1, 2 and 3 GHG emissions, kton CO2e 2023 2022 2016 Total Scope 1, 2 and 3 GHG emissions (location-based) 8,367 9,176 10,104 Percentage of total GHG emissions reduction from base year (location-based) 17 9 Total Scope 1, 2 and 3 GHG emissions (market-based) 8,641 9,518 10,410 Percentage of total GHG emissions reduction from base year (market-based) 17 9 Air emissions: GHG Biogenic CO2-emissions, kton 2024 2023 2022 2021 2020 2016 Scope 1, from biofuel use 417 431 469 475 455 526 Scope 2, from purchased steam 42 44 37 39 38 2 Other air emissions1), ton 2024 2023 2022 2021 2020 NOx as NO2 1,143 1,330 1,450 1,587 1,740 SOx 113 197 189 463 488 Particulate matter 68 86 85 100 85 1) Other air emissions from use of fuel in production facilities. Energy intensity per net revenue 2024 Total Scope 1 and 2 GHG emissions (location- based) per net revenue (tCO2e/SEKm) 15 Change compared with previous year (%) 2 CO2–intensity Outcome 2005–2024: –25% 1) Refers to wholly owned Essity Tissue production facilities. CO 2 per ton1) 0.7 0.8 0.9 1.0 1.1 1.2 2024202320222005 Outcome 2005–2024: –2 5%1.06 0.82 0.78 0.79 Contents 73Essity | Annual Report 2024Sustainability statements | E – Environmental disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report | Climate change Water Forest and fiber Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Sustainability matters Value chain Material impact Financial effect Water consumption, withdrawals and discharges Actual negative impact Potential negative effect (risk) Impact, risk and opportunity management Description of the processes to identify and assess material water related impacts, risks and opportunities For information on the process to identify and assess material impacts, risks and opportunities related to water, see page 61. Policies related to water In areas where Essity has identified significant water risks, Essity is committed to reducing water consump tion within our operations. According to Essity’s RESH Policy, Essity shall meet or exceed applicable legal requirements for compliance with environmental issues, including water. Essity already has wellestablished local procedures and processes to meet these requirements. To ensure consistency across all facilities, we are currently developing a global water policy that covers water usage, water management, and wastewater treatment, as well as securing continuous wastewater treatment systems. The policy, together with the local procedures, will ensure sustainable use and sourcing of water in our operations. For more information about Essity’s RESH Policy, see page 51. Why water matters Water is essential for life and a prerequisite for diverse and healthy ecosystems, yet only 1% of the Earth’s water is usable freshwater. As climate change intensifies, water stress increases, affecting people, societ ies, ecosystems and contributing to biodiversity loss. Water shortages and water contamination pose sig nificant challenges and may also negatively impact on people, societies, and the environment. Inefficient water use not only exacerbates these challenges but also increases the risk of biodiversity loss. This intri cate connection affects our global ecosystem. It also directly influences Essity’s operations, emphasizing the crucial importance of responsible water management in our processes. Actions and resources related to water Essity’s impact on water mainly comes from our tissue production, as water is necessary to transport fiber during the papermaking process. In areas with waterstress where Essity has tissue production facilities, water shortages could disrupt our operations and have a negative impact on local communities. This could risk Essity losing its social license to operate in these areas. In 2023–2024, Essity conducted a detailed technical survey to analyze internal water use and to identify best practices based on the topperforming facilities. The aim was to establish a benchmark for water usage and identify sites located in waterstressed areas. The survey covered key aspects such as current water consumption, water risk identification, and the prioritization of actions. Eight of Essity’s tissue production facilities were identified as being in areas of high risk of waterrelated stress due to a combination of physical, regulatory and reputational factors. We assess waterrelated risks for our tissue production facilities, considering geographical and opera tional factors and recognizing the diverse challenges water presents worldwide. Essity addresses its impact on water resources by taking a proactive stance so that it is ready to manage emerging contaminants and heightened regulatory requirements. Thereby, Essity continuously develop our existing wastewater treat ment technologies. Essity has installed wastewater treatment technology in the majority of our production facilities and we continue to invest in this area when new facilities are added. By recirculating water in our tissue production process several times, we reduce water intake and pollutant loadings within effluent water discharges, while also helping to reduce energy use for water heating needs. Water is treated after use, monitored and dis charged to meet or exceed regulatory requirements. Although water demand is high at tissue production facilities, water consumption and actual loss is low, with most of the water being treated and returned to the environment. Process water that is not directly discharged or which leaves the site untreated is sent to third parties, such as publicly or privately owned treatment facilities, prior to final discharge. This is completed in a manner that complies with regulatory requirements. Another daily water use in the production facilities is cooling water. Cooling water has been heated through heat exchange to cool equipment or processes and is therefore considered noncontact. Investments and partnerships Essity continues to invest in research into technology, pilot projects and other water use and quality initia tives as appropriate to remain a sustainability leader. We will also increase our focus on compliance with expanded regulations, including those regarding emerging contaminants of concern. For many years Essity has worked to reduce the levels of suspended solids and biological oxygen demand (BOD) in discharged effluent water. We also keep abreast of upcoming regulations regarding emerging contaminants to be pre pared to adjust operations and treatment needs accordingly. Essity has entered an exclusive partnership with the global technology company Voith to develop a tissuemaking process that has the potential to reduce energy use and greenhouse gas emissions while cutting water consumption by up to 95%. In August 2024 Voith and Essity received funding to continue the project. Water WaterE Upstream activities Own operations Downstream activities Contents 74Essity | Annual Report 2024Sustainability statements | E – Environmental disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report Climate change | Water Forest and fiber Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Targets and metrics Targets related to water The 2023 water baseline assessment was followed up in 2024 by a detailed study on water use, at the water stressed and other sites, to identify best practices and to be able to set priorities. The study included sites that are exposed to an increased risk of extreme weather conditions that result in, for example, drought or flooding. Based on the results of the 2024 water study, Essity set an ambitious target to reduce freshwater intake by 25% at eight tissue sites in waterstressed regions by 2032, using 2022 as the baseline. The target addresses the water consumption at sites with the highest risk of water stress and focuses on reduction of water intake at waterstressed sites where criteria for priority setting were established. The study also identified over 100 best practices for water use applicable to Essity’s manufacturing facili ties. These practices go beyond water flow and volume to include water quality, minimum requirements for recirculating treated effluent, and optimizing water treatment to enhance wastewater quality. This initiative supports the development of a broader strategic vision for Essity to address water consumption and improve sustainability efforts in waterstressed regions. Water consumption In 2024, Essity’s total water consumption was 8 million m3. Overall, the water intensity, water consumption in relation to production volumes, was 40% in the eight tissue production facilities located in waterstressed areas, compared with Essity’s total water intensity for its tissue operations. The eight sites in waterstressed areas accounted for 9% of Essity’s total water intake. The cooling water has been heated through heat exchange to cool down equipment or processes and is therefore considered indirect. Surface water, which represents the largest share of water intake, must sometimes be treated before use in production, for example, when it is purified from dissolved and suspended solid content. WaterE Water Water, Mm3 2024 2023 2022 2021 2020 Water intake 93 97 97 93 92 of which surface water 69 72 72 70 68 of which ground water 18 19 19 17 18 of which municipal water systems 6 6 6 6 6 of which rainwater and water from third party – – – – – Water discharge 85 89 87 83 82 of which surface water 78 83 80 77 76 of which water to a third party 7 6 7 6 6 of which ground water – – – – – Water consumption1) 8 8 10 10 10 Water emissions, tons 2024 2023 2022 2021 2020 COD 6,472 6,474 7,210 6,686 6,483 BOD 803 919 1,009 937 852 Suspended solids 910 1,098 1,290 996 853 AOX 4 4 4 6 4 P 35 34 31 25 33 N 205 246 282 124 143 Water intensity, intake/production, m3/ton 2024 2023 2022 2021 2020 Tissue production facilities, total 35 36 34 34 32 Tissue production facilities, water-stressed areas 14 15 16 16 15 Essity’s water target, water-stressed areas 2024 2023 2022 Water intake, Tissues sites, water-stressed areas, Mm3 8 8 9 Tissue sites, water-stressed areas, % change vs 2022 –5 1) Water consumption is water intake minus water discharged. Water Reduction of freshwater intake at tissue sites in waterstressed regions Target: –25% Outcome: –5% 202420232022 8.5 8.18.1 –5% Mm 3 Contents 75Essity | Annual Report 2024Sustainability statements | E – Environmental disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report Climate change | Water Forest and fiber Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Forest and fiberE Sustainability matters Value chain Material impact Financial effect Regulatory changes, shortage of fiber and alternative fibers Potential negative impact Potential negative effect (risk) Impact, risk and opportunity management Material impacts, risks and opportunities and their interaction with our strategy and business model Essity’s impact on forests and biodiversity comes primarily from using fresh woodbased fiber. We are aware of the potential negative impact on people and the environment created through our operations and aim to use only fresh woodbased fiber certified through FSC and PEFC. If forests are not wellmanaged, there is a risk of deforestation, habitat degradation, climate change, pollution and negative impacts on local commu nities. The growing demand for forest resources is putting increased pressure on existing forests and supply chains. Stakeholders are placing higher demands on transparency and traceability within the supply chain, as well as compliance with certification standards. These requirements are further reinforced by new regula tions, such as the EU Deforestation Regulation. Essity sees this as an opportunity to eliminate illegal and unsustainable practices from the supply chain. Description of processes to identify and assess material forest and fiber related impacts, risks, dependencies and opportunities For information on the process to identify and assess material impacts, risks and opportunities related to forest and fiber, see page 61. Why forest and fiber matter Global forests are critical in the fight against climate change. They provide a habitat for a variety of species and help sustain rural livelihoods for local communities. Forest preservation is vital for functioning eco systems. Fresh woodbased fiber is a key raw material for Essity and as a global purchaser of pulp and other fiberbased materials, we have a responsibility to minimize our potential impact on forests. A joint effort along the value chain between Essity, our suppliers and other stakeholders is needed to mitigate the risks of biodiversity loss, end deforestation and secure the responsible use of forest resources. Policies related to forest and fiber Essity is a global user of both fresh and recycled woodbased fiber materials. We are committed to sourcing fresh woodbased fiber from responsibly managed forests. Our sustainability strategy includes a longstand ing focus on responsible fiber procurement, including fresh woodbased fibers, recycled fibers and alterna tive fibers, which thereby supports our commitment for nature conservation and biodiversity. Essity’s Fresh Woodbased Fiber Procurement Policy describes the principles, intentions and requirements that we place on our supply chain regarding the delivery of fresh woodbased fiber materials, as well as the framework and tools we use to ensure compliance with the policy. Most of the world’s resources originate from nature. An understanding of the consequences and mitiga tion of extraction of these resources is crucial and is a key part of our sustainability strategy. There is a need to end deforestation, habitat degradation, climate change and pollution, as well as respect human rights. Essity aims to play an active role in preventing forest degradation and securing net zero deforestation as well as promoting and increasing the use of responsibly managed and certified forests. Responsible forest man agement is required to protect biodiversity in the KunmingMontreal Global Biodiversity Framework and the UN’s Intergovernmental Panel on Climate Change (IPCC). This is also a priority for Essity and we require our suppliers to maintain and safeguard responsible forest management based on the principles of biodiversity and forest conservation. Furthermore, our goal is to purchase all woodfiber raw material as certified. All fresh woodbased fiber materials must be sourced through a publicly recognized thirdparty Chainof Custody system, and we have identified several categories as unacceptable sources of fresh woodbased fiber. Essity supports, encourages and prioritizes best practices in sustainable forest management and wood fiber traceability in its supply chain of fresh woodbased fiber materials. It is our goal to eliminate illegal and unsustainable practices from the supply chain. Through robust procurement policies and due diligence systems, we ensure products are procured legally, ethically and sustainably. Essity’s Fresh Woodbased Fiber Procurement Policy was updated in 2023 to address our stakeholders’ increased transparency requirements in the supply chain and to describe the company’s expectations in relation to suppliers’ performance and disclosures. We will continue to expand our public reporting about fiber supply and use, forest certification and other relevant information related to our forest and fiberrelated targets, initiatives, engagement and traceability. Through engagement with the Consumer Goods Forum, FSC and PEFC, as well as with key suppliers, we promote forest certification and drive sustainable forest management practices. Environmental transpar ency and accountability are vital for monitoring progress toward a deforestationfree future. The Procure ment Policy is distributed to our pulp suppliers annually with a detailed pulp supplier questionnaire. The policy is also available on essity.com. For more information on Essity’s Fresh Woodbased Fiber Procurement Policy, see page 51. Forest and fiber Upstream activities Own operations Downstream activities Contents 76Essity | Annual Report 2024Sustainability statements | E – Environmental disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report Climate change Water | Forest and fiber Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Actions and resources related to forest and fiber Essity has set three focus areas to ensure responsible fiber procurement: partnerships with other organiza tions to gain and enhance knowledge, certifications and investment in innovations. Partnerships We use partnerships to gain knowledge and develop methods to measure impacts on forests and eco systems. Essity participates, with other leading consumer goods companies, in the Consumer Goods Forum Forest Positive Coalition of Action initiative (CGF Forest Positive Coalition), which aims to combat global forest degradation and deforestation while preserving biodiversity. The coalition has developed a roadmap for pulp, paper and fiberbased packaging, which supports its members to source pulp, paper and fiber based packaging materials from sustainably managed forests. It encourages the use of certifications, promotes recycling and the use of recycled materials, and encourages each member to implement commitments, actions and timebound targets. In 2023, Essity reaffirmed its requirements for wood and fiber traceability from all pulp mill suppliers and our commitment to promote forest certification via the CGF Forest Positive Coalition. We continued the dis cussions on climate targets with our pulp suppliers to better understand emissions from forest management and landbased emission reductions and removals according to SBTi FLAG (Forest, Land and Agriculture). To better understand how certification benefits biodiversity and develop monitoring tools for conserva tion objectives, Essity participates in a project run by the FSC on biodiversity impact assessment. We are also involved in a project run by the UK Woodland Trust that is studying afforestation and its impact on water flow and quality. Certifications We use international thirdparty certifications, FSC and PEFC, to ensure responsible fiber procurement from sustainably managed forests. Essity works with, and encourages, noncertified suppliers and forest owners to become certified. This secures our procurement of certified materials while increasing the availability of certified raw materials to other users. To further promote responsible forestry at the global, regional and national levels, we support further development of international certification systems. Preventing defore station and promoting biodiversity throughout the entire value chain is crucial for Essity to achieve its forest and fiberrelated targets. For its own operations, Essity uses ISO 14001 and EMAS as certified environmental management systems, providing a framework for the organization to follow to improve the environmental performance. Investments in innovation Essity invests in breakthrough technology to replace parts of our need for woodbased virgin pulp with recy cled and alternative materials. In 2023, Essity, for example, inaugurated the world’s first tissue production line in Hondouville, France, under the Tork brand, where the fiber raw material consists of recycled beverage cartons. Essity uses agricultural residues from wheat straw at its tissue plant in Mannheim, Germany. This initiative aims to reduce reliance on wood fiber while also contributing to lower energy and water consumption. Targets and metrics Targets related to forest and fiber Nature conservation and respecting biodiversity through responsible forest and fiber management are prior ities for Essity. Our goal is to ensure that all woodfiber raw materials are certified and sourced through a rec ognized thirdparty ChainofCustody system. All raw materials derived from fresh woodbased fiber used in the company’s products and packaging must be certified in accordance with FSC or PEFC. At a minimum, all fresh woodbased fiber must comply with the FSC Controlled Wood Standard to be eligible for purchase. As part of the CGF Forest Positive Coalition, Essity will, in part, focus on initiating progress towards a Deforestation and Conversion Free (DCF) supply chain for all volumes by 2025. Active engagement with suppliers to drive improvement and increase engagement in landscape initiatives is an important step. The CGF Forest Positive Coalition roadmap promotes engagement with suppliers to ensure adherence to sus tainable sourcing practices, the implementation of monitoring and reporting mechanisms to track progress and ensure accountability and investment in innovations. Essity is committed to reporting the KPIs for com modities that are material for our business to the CGF Forest Positive Coalition. Fiber use, pulp and recycled paper1) 2024 2023 2022 2021 2020 Fiber used, million tons 3.5 3.6 5.2 5.0 5.1 of which, pulp consumption 1.9 1.8 3.3 3.2 3.2 share of total fiber use, % 55 50 64 64 63 of which, recovered paper consumption 1.6 1.8 1.9 1.8 1.9 share of total fiber use, % 45 50 36 36 37 Fiber sourcing fresh wood-based fiber by certification2), % 2024 2023 2022 2021 2020 FSC 62 59 59 63 59 PEFC 37 39 38 35 36 FSC Controlled Wood standard3) 1 2 3 2 5 Total 100 100 100 100 100 Target fulfillment 99 98 97 98 95 1) 2023 excludes discontinued operations. Prior years are not adjusted. 2) The distribution applies to procurement by wholly owned companies. 3) Includes mainly packaging and a small amount of externally purchased mother reels. Forest and fiberE Fresh fiber Share of FSC and PEFCcertified fresh fiber Target: 100% Outcome: 99% Through certifications such as FSC and PEFC, Essity ensures sustainable fiber procurement, thereby preventing deforestation and promoting biodiversity. 2024202320222021 98% 97% 98% 99% Contents 77Essity | Annual Report 2024Sustainability statements | E – Environmental disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report Climate change Water | Forest and fiber Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Resource use and circular economyE Why resource use and a circular economy matter Essity’s ambition to achieve net zero emissions by 2050 requires integrating climate action with circularity. By embedding resource efficiency throughout the product lifecycle, we prioritize lowcarbon materials, sustainable production and innovative product design. Since the 1990s, our Life Cycle Management framework, including LCAs, has laid the groundwork for transitioning from linear to circular practices. Our circularity principles – Reduce, Reuse and Recycle – guide Essity’s development process. Reduc ing materials and resources strengthens environmental performance of our production and innovation. Reusable and hybrid products are still a smaller part of our portfolio but we are working to increase our offerings. Recycling products after use is a development area where we collaborate with partners to drive progress. By minimizing waste across life cycles, Essity reduces reliance on primary materials, pro motes sustainable consumption, eases the strain on waste management and supports healthier ecosys tems. This makes it vital to actively minimize waste across the value chain and explore circular solutions beyond the product lifecycle. Our industry must reimagine design, recycling and consumer habits to transition from linear to cir cular business models. This requires creative thinking, innovative business models and strong partner ships. Together, we can drive efficient resource use, create better products and reduce waste after use. Resource use and circular economy Sustainability statements | E – Environmental disclosures Sustainability matters Value chain Material impact Financial effect Resource inflows (use of natural resources) Actual negative impact No financial effect Resource outflows (products and services) Actual negative impact Potential negative effect (risk) Impact, risk and opportunity management Description of the processes to identify and assess material resource use and circular economy- related impacts, risks and opportunities For information on the process to identify material impacts, risks and opportunities related to resource use and circular economy, see page 61. Policies related to resource use and circular economy Essity focuses on improving wellbeing for people while reducing impact on the environment. The approach to issues relating to resource use and circular economy aims to reduce the use and increase the efficiency of materials that have a negative impact on the climate, the environment and people’s health. Our Sustainability Policy and Essity’s Global Supplier Standard include requirements on responsible sourcing of all materials, low carbon resource use and circularity for us and our suppliers. Essity has estab lished processes to maintain a high level of resource efficiency within our own operations such as the inte gration of low carbon and circularity principles into the company’s business model. These include responsible raw material procurement, more resourceefficient production and sustainable solutions that enable customers and consumers to minimize material waste during and after use. Essity aims to replace primary fossilbased plastics in our packaging with recycled plastics. For primary fossilbased plastics in our products, we collaborate with material suppliers to develop plastics from renew able resources. Collaboration with different stakeholders is also part of our Sustainability Policy. For more information on Essity’s Sustainability Policy, see page 51. Actions and resources related to resource use and circular economy Resource efficiency Essity is committed to contributing to the development of a circular economy by being efficient in resource use throughout its own operations. Essity is working to identify more sustainable and circular solutions, accelerate development and create opportunities by cooperating with customers, consumers, suppliers and other partners. The principles we have implemented focus on achieving more with fewer resources, prioritiz ing lowcarbon and circular approaches. We conduct LCAs to measure the environmental impact throughout the entire life cycle of our products. Since the 1990s, we have used LCAs to develop smarter designs and reduce material usage in our products while maintaining functionality, product safety and quality. LCA covers the entire process – from raw material extraction, production of materials, products, and packaging, to transport and distribution, product use, and waste management after use. Environmental assessments are an integral part of our innovation process, helping us evaluate and reduce the environmental impact of our products and services across their entire life cycle. Resource efficiency is well integrated into our development processes. We reduce material usage where possible by, for example, using lower grammages in plastic packaging or thinner hygiene products, while maintaining or improving functionality through developments in materials or design. These principles are also embedded in our innovation process when we develop new products, solutions and services. In the research phase we evaluate opportunities, challenges and risks. In the development phase we assess the environmental impact with life cycle, circularity and social assessments. Results are used to improve the social and environmental impact of our innovations. Essity is committed to invest in innovations that aim to aid our target of being resource efficient as a company. Upstream activities Own operations Downstream activities Contents 78Essity | Annual Report 2024 Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report Climate change Water Forest and fiber | Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Essity’s strategy aims to reduce primary fossilbased plastics in absorbent hygiene products and hygiene packaging. The main topics of the strategy are summarized below: • Reducing plastic materials in products and packaging • Replacing primary fossilbased plastics with renewable or recycled materials in packaging and biomass balanced resources in products • Ensuring sustainable and controlled consumption during use • Introducing reusable products Primary and secondary renewable fibers In personal care products we use fresh woodbased fiber in the absorbent core. We evaluate the use of fiber based on customer and consumer needs relating to performance, quality and cost, balanced with the envi ronmental impact. We are committed to sourcing fresh woodbased fiber from responsibly managed forests and use a significant percentage of recycled fiber in our tissue products. Reduce fossil-based primary plastics Essity actively works to replace primary fossilbased plastics in our packaging with renewable or recycled plastics or new flexible paperbased packaging. We continue to improve current products with smarter designs that use less materials and we develop reusable and hybrid products. This remains the most signifi cant way for Essity to reduce the carbon footprint and waste of our products. Reusable products are an effective way to reduce materials and waste in the longterm only if we can meet functional demands from the user. Preventing waste generation through circular design Singleuse products and packaging waste are increasingly seen as unfavorable from a circularity perspec tive. Increased demands and more robust requirements around singleuse products give Essity an oppor tunity to shift to other renewable or recycled materials and reusable products that reduce environmental impact. To deliver on our wasterelated strategy and increase usage of circular design, we follow the circu larity principles of Reduce, Reuse and Recycle. We reduce waste in production and waste after the use of our products. Reducing waste in production is about identifying prevention possibilities and finding a second use for unavoidable production waste. Mate rials that can be feasibly recycled or recovered are handled in such a manner. Some of our products end up in landfills, but we want to change this, as it is regarded as a last resort. Essity strives to transform the largest of these waste streams so that these products can be recovered through our waste valorization initiatives. We employ an approach for our products that ensures smarter designs and resource efficiency. Through continuous development and improvements, Essity has reduced the carbon footprint of the company’s product offerings in Europe by up to 47% over a 16year period. It is essential that current products continue to be improved, with enhancements to the design to use less materials. Essity is also committed to promoting sustainable consumption, which involves working together with the user. One example of this is TENA SmartCare, where care and product use is optimized and waste is reduced through digital monitoring and thin products. The monitoring makes it easier to replace the product at the right time which leads to fewer products used. Another example is our Tork dispensers where we reduce consumption as the user takes one napkin at a time, encouraging behavioral changes of consumers to reduce the number of products used at a time. In recent years, we have launched several fully washable products and hybrid products where we can achieve the desired performance. We continue to introduce fully washable and reusable products or hybrid products where we can ensure performance and user acceptance while reducing the use of primary materials and creating less waste. We have significantly enhanced the recyclability of our paper and plastic packaging. Our range includes compostable tissue products and Essity actively encourages consumers to compost food service items like Tork napkins and Consumer Tissue household towels. Tork Paper Circle® is our pioneering recycling service for hand towels and our next step is to use our learnings from it and evaluate if tissue products can be recy cled in current recycling of other paper products. We are currently exploring alternative postconsumption solutions for absorbent hygiene products. The environmental assessments conducted throughout our innovation process provide deeper insights into how waste can be minimized, both during production and throughout the lifecycle of our products. Optimization of waste management and circular business practices To achieve common targets regarding waste management we work together with national and European trade associations. We are, therefore, actively involved in discussions with policymakers to establish new waste regulations and targets, often including extended producer responsibility schemes for both packag ing and products, to ensure better collection and recycling. Globally, Essity is conducting research and trials on technologies needed to further reduce or transform the company’s largest process waste streams. We collaborate with different stakeholders to promote the use of sustainable and circular materials. For example, we support the development of certification systems such as the FSC, PEFC for fibers and Interna tional Sustainability and Carbon Certification (ISCC+) for biomassbalanced materials. We also engage in conversations throughout the value chain, including with partners such as the Consumer Goods Forum (CGF), European Disposals and Nonwovens Association (EDANA), Confederation of European Paper Industry (CEPI), the Ellen MacArthur Foundation and RecyClass, to promote the implementation of circular economy solutions designed to tackle waste. Essity is an Ellen MacArthur Foundation Network Partner and Circular Plastics Alliance stakeholder. Through the CGF’s Coalition of Action on Plastic Waste, Essity works with customers, other companies and organizations to jointly reduce plastic waste and to strive to improve social systems so that no plastic waste is disposed of in nature. The Ellen MacArthur Foundation The Ellen MacArthur Foundation is working to create a circular economy that eliminates waste and pollu tion, circulates products and materials and regenerates nature. The Network provides a forum to share, learn and implement ideas to develop and scale circular economy solutions. Resource use and circular economyE Sustainability statements | E – Environmental disclosuresContents 79Essity | Annual Report 2024 Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report Climate change Water Forest and fiber | Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Metrics and targets Targets related to resource use and circular economy Essity has established targets that aim to support our ambitions regarding resource efficiency and circularity. The targets relate to: • Sustainable innovations – annually, 50% of Essity’s innovations shall contribute to social and/or environ mental improvements • Reduce greenhouse gas emissions from product waste – product waste is part of Essity’s Scope 3 emis sions target to reduce by 35% by 2030 • Circular packaging – Essity aims for 100% recyclability and 85% renewable or recycled materials by 2025 • Zero waste to landfill from production – all production waste shall be recycled as material or energy no later than 2030 Sustainable innovations Our ambition is to develop innovative solutions that meet user needs, deliver commercial value and benefit social and environmental sustainability. We want to promote resource efficiency in the whole life cycle, sustainable consumption during use and contribute to less waste after use. Our target for sustainable innovations is that at least 50% of Essity’s innovations will yield social and/or environmental improvements. Essity tracks the sales from launched innovations, which are assessed against both social and environmental improvement criteria. Innovations can be assessed as sustainable if meeting either one or both assessments. We are guided by a life cycle perspective for our social and environmental assessments. The environmental assessments are based on LCAs together with our circularity principles Reduce, Reuse and Recycle. An LCA is a scientific tool and includes the whole life cycle for a product or a service. We are guided by ISO 14040 series and Product Category rules for tissue and absorbent hygiene products when we perform LCAs. Improvement of the environmental and social performance is embedded in the innovation process for all products and services. Reduce greenhouse gas emissions from product waste Essity aims to reduce greenhouse gas emissions from product waste as part of Essity’s total Scope 3 target to reduce emissions by 35% by 2030, from the base year 2016. To achieve this target, we need to decrease the use of primary fossil based plastics in our products and packaging, increase the use of renewable or recycled plastic and ensure a sustainable and controlled consumption during usage of our products. Addi tional measures include increasing fully reusable and hybrid products to reduce materials and to support alternative waste management after use. Circular packaging Essity has set targets to increase the total amount of renewable or recycled materials in the company’s packaging and to make all packaging recyclable. By 2025, we aim to achieve 100% technical recyclability in our packaging and 85% of our total packaging materials to come from renewable or recycled materials, whereof 25% of our plastic packaging to be based on recycled materials. The plastic part of our packaging target is part of our New Plastic Economy commitment with Ellen MacArthur Foundation. We are guided by external requirements for recyclability of plastic packaging. Recyclability and renewable or recycled content in our paper and plastic packaging is measured on a yearly basis. Zero waste to landfill from production Essity’s waste target is for all production waste to be subject to material and energy recovery by 2030. This will reduce the waste generated from Essity’s value chain, reduce the related greenhouse gas emissions and contribute toward fulfilling our Scope 3 targets. Resource use and circular economyE Sustainability statements | E – Environmental disclosures Sustainable innovations 2024 2023 2022 2021 2020 Sustainable innovations1), % 87 85 72 59 65 Whereof Social, % 54 48 56 47 58 Whereof Environmental, % 55 58 38 32 41 1) To avoid double counting, sustainable innovation will only be counted once, which means that the sum of the underlying KPIs for Social and Environmental can be higher than the total sustainable innovations target. Sustainable innovations Share that yielded social and/or environmental improvements Target: >50% Outcome: 87% In 2024, we continued to develop and launch reusable and hybrid products, fossil plasticfree products within Feminine Care, compostable household towels from Consumer Tissue, as well as Tork OptiServe® Coreless within Professional Hygiene, a highcapacity toilet paper system designed for facili ties where efficiency, sustainability, and an improved user experience are key priorities. 2024202320222021 59% 72% 87%85% Contents 80Essity | Annual Report 2024 Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report Climate change Water Forest and fiber | Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Resource use and circular economyE Sustainability statements | E – Environmental disclosures Resource inflows Essity’s primary raw materials are pulp, recovered fiber and fossilbased materials. The company strives to reduce the use of raw materials for our products where possible. Many of our products, for example tissue products, contain renewable fiber, such as fresh woodbased fiber, recycled and/or alternative fiber. We continue to evaluate and invest in the use of alternative fibers. Plastics are used in our absorbent and medical products to ensure function, hygiene and safety aspects. We try to find low carbon and circular alternatives as well as explore biomassbalanced plastics from renew able sources. Work to increase efficiency at our production facilities is a continuous process that includes digitalization and automation, with the aim to achieve sustainable, efficient and worldclass production. Renewable raw materials, fresh woodbased fiber and recovered fiber account for the largest share of the total volume of material in Essity’s products. Lower climate impact through the use of innovation Products in Europe Year Carbon footprint reduction, % Incontinence Products 2008–2024 TENA Flex –26 TENA Slip –34 TENA Pads and Liners –47 TENA Men –26 TENA Pants and Underwear –38 TENA Comfort –35 TENA Bed –24 Feminine Care 2008–2023 Feminine Ultra towels –34 Baby Care 2008–2022 Libero and Lotus open diaper –31 Libero and Lotus pant diaper –32 Professional Hygiene Tork Toilet paper 2011–2022 –6 Tork napkins 2011–2019 –9 Tork paper hand towels 2011–2017 –18 Consumer Tissue Household towels 2011–2018 –19 Handkerchiefs and facial tissues 2011–2020 –8 The LCAs performed by Essity have been subject to third-party reviews. Packaging data 2024 2023 2022 2021 Packaging, total kton 184 182 173 173 whereof paper packaging 139 136 133 133 whereof plastic packaging 45 46 40 40 Technical recyclability of packaging, total % 91 89 85 81 whereof paper packaging 97 94 89 83 whereof plastic packaging 72 72 72 73 Renewable or recycled materials in packaging, total % 80 78 80 78 Renewable or recycled materials in plastic packaging, % 17 12 12 7 whereof renewable materials in plastic packaging 1 2 2 2 whereof recycled materials in plastic packaging 16 10 10 5 Packaging Share of packaging manufactured from renewable and/or recycled material Target 2025: 85% Outcome: 80% Essity is striving for 85% renewable and/or recycled material in the company’s packaging. This target applies to both paper and plastic packaging for Essity’s brands. Production waste Subject to material or energy recovery Target 2030: 100% Outcome: 71% Resource efficiency and the reduction of waste are important in Essity’s production facilities. The target is that all production waste will be subject to material and energy recovery by 2030, which reduces greenhouse gas emissions. 2024202320222021 78% 80% 80%78% 2024202320222021 66% 63% 69% 71% Contents 81Essity | Annual Report 2024 Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report Climate change Water Forest and fiber | Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Resource use and circular economyE Sustainability statements | E – Environmental disclosures Production waste, kton 2024 2023 2022 2021 2020 Waste management 378 427 531 467 449 Non-hazardous waste landfill 374 421 520 458 442 incineration without energy recovery 1 1 1 5 4 other waste management 2 5 9 3 2 Hazardous waste landfill 0 0 0 0 0 incineration without energy recovery 0 0 0 0 0 other waste management 1 0 1 1 1 Waste recycling 906 945 912 892 961 Non-hazardous waste incineration with energy recovery 102 205 238 208 205 recycling 368 368 380 341 338 other waste recycling 435 371 292 343 416 Hazardous waste incineration with energy recovery 0 0 0 0 0 recycling 1 1 2 1 2 other waste recycling 0 0 0 0 0 Total waste 1,284 1,372 1,443 1,359 1,410 Waste management, % 29 31 37 34 32 Subject to material or energy recovery, % 71 69 63 66 68 In Europe, the production facilities recover the majority of their deink residuals by utilization of various other offsite outlets, including wastetoenergy, construction or agriculture. In North America and Latin America, some volumes of deink residuals are also recovered through reuse in agriculture or construction, however, in these regions, wastetoenergy outlets are less commonly available and the moisture and mineral content of this waste stream is often a limiting factor in available recovery outlets. Essity’s Personal Care production facilities also have small volumes of productionrelated waste streams that are often successfully recovered through recycling or energy recovery, including trimmings and captured super absorbent material. The recovery rate from Essity’s production facilities varies due to differences in national legislation and the availability of feasible wastetoenergy outlets. Volume changes over time may positively or negatively impact the mix of material and energy recovery. Of Essity’s production waste, a small proportion (0.2%) is hazardous waste. This is primarily waste oil that is considered hazardous under EU regulations. It also includes organic solvents, batteries and used light bulbs. Resource outflows We produce tissue products that can be technically composted or recycled. This helps our customers either compost or recycle the products. We are also looking into recycling options for our other products. In cases where composting or recycling is not possible yet, we consider incineration with energy recovery as an alternative. The proportion of renewable or recycled materials was 80% (78) in 2024. 91% (89) of our total packaging were technically recyclable. For plastic packaging, which accounts for about 24% (25) of the total packaging volume, 17% (12) was manufactured from renewable or recycled materials. The proportion of recovered plastic was 16% (10). The proportion of technically recyclable plastic packaging was 72% (72). Tissue production circularity and waste streams Essity strives to lower its total amount of greenhouse gas emissions by reducing the amount of production waste sent to landfills and instead recycling the waste or extracting energy from it, thereby helping Essity to achieve its Scope 3 emissions reduction commitment. In 2024, the total amount of production waste decreased and 71% (69;63) was recovered. All waste data for Essity includes water content, with the water content of waste sent to landfill being approximately 50%. In volume, Essity’s two largest productionrelated waste streams currently landfilled are deinking residuals and pulper rejects. These waste streams come from the paper recycling process at our deink tissue mills. Deinking residuals comprise the unusable portions of the wastepaper entering the recycling process, for example, short fiber that passes through the tissue machines and minerals found in paper coatings. These residual materials are removed as solids from the onsite wastewater systems and dewatered. Some of Essity’s production facilities, such as Lilla Edet, Sweden, and Nokia, Finland, beneficially reuse the deink residuals in onsite biomass boilers as a fuel source. Contents 82Essity | Annual Report 2024 Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures EU taxonomy report Climate change Water Forest and fiber | Resource use and circular economy Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Own workforce Sustainability matters Value chain Material impact Financial effect Work conditions: Health and safety Potential and actual negative impact No financial effect Equal opportunity: Diversity Potential positive impact No financial effect Equal opportunity: Gender equality and equal pay Potential negative impact No financial effect Equal opportunity: Training and skills development Potential positive impact No financial effect Strategy Interests and views of stakeholders Our priorities for people and culture are directly linked to the business strategy and future talent needs. At Essity, we believe that close collaboration with internal and external stakeholders is crucial for understand- ing different perspectives, improving decision-making, and enhancing overall organizational performance. Why our own workforce matters Our employees are essential for ensuring long-term success in company value creation and driving efficient operations by implementing continuous sustainability improvements. Essity recognizes its workforce as the cornerstone for fulfilling its purpose, “breaking barriers to well-being”, a mission deeply rooted in the com- pany’s Beliefs & Behaviors. Essity is committed to provide safe, attractive, inclusive workplaces and foster an environment where our employees can thrive and grow. By focusing on the most material matters affecting our workforce, Essity enhances employee engagement, strengthens its position as an employer of choice and drives business value. At Essity, our ambition is to create an organization and culture where people and business thrive. We believe that having a diverse workforce, the right capabilities, engaged employees, an inclusive culture based on Beliefs & Behaviors and a strong leadership are competitive advantages for Essity as a company. We believe that when employees grow, Essity grows. The areas that have been identified as being the highest priority for our employees are health and safety, diversity, equity and inclusion (DEI), training and skills development, gender equality and equal pay for equal work. These factors are all essential for sup- porting both organizational and sustainable growth. By working systematically with these priorities, Essity ensures that our employees remain a driving force for innovation and continued progress. Own workforceS Shareholder expectations, dialogue with employees and employee representatives, global demographic and technology trends, as well as laws and directives, are all factors taken into consideration to set priorities in our sustainability agenda. Material impacts, risks and opportunities and their interaction with our strategy and business model Essity’s approach is that risks are managed effectively in a safe workplace, which in turn creates opportuni- ties for engaged employees. At Essity, we recognize the importance of identifying and managing material impacts, risks and opportunities to ensure the long-term sustainability of our business. Furthermore, Essity believes that the organization operates more efficiently when employees are well-informed about safety pro- cedures, enabling them to avoid potential risks. Our approach to sustainability is aligned with our long-term objectives and contributes to our journey to become the undisputed leader in health and well-being. Health and safety Ensuring a healthy and safe work environment by protecting our employees is of the highest priority. Essity recognizes that in a safer workplace, risks are effectively managed and opportunities for increased employee satisfaction are created. Furthermore, operational efficiency is improved when employees are well-informed of safety protocols and empowered to navigate potential hazards. Despite health and safety being the high- est priority, accidents can happen. Therefore, Essity is assessed to have an actual negative impact due to recordable injuries at the workplace and a potential negative impact on health and safety due to the risk of life-threatening or permanent injuries of employees. Although incidents of a life-threatening nature are not likely to take place, Essity continuously assesses risks related to health and safety to prevent occurrence of any incidents that cause harm to the workforce. The consequences for Essity, if the company were to fail in its commitment to health and safety, include risks of non-compliance, production loss and reputational loss. These could lead to temporary production stoppages, sanctions, fines or legal liabilities in addition to personal suffering. Diversity, Equity and Inclusion At Essity, we recognize that DEI plays an important role in activating a strong culture based on our Beliefs & Behaviors, which, in turn, helps to attract and retain the talent we need to successfully run our business. DEI is a catalyst for innovation, high quality decision-making and improved performance. Essity has a compre- hensive DEI agenda which includes a global strategy and roadmap with key initiatives. Our DEI work is cham- pioned and followed up by the Executive Management Team, who serves as Essity’s global DEI Council. Through proactive and continuous work to reinforce inclusion, while also recruiting and retaining em - ployees from a large and diverse talent pool, Essity has a potential positive impact on DEI. If Essity were to be unsuccessful in its DEI ambitions, the result could be differential treatment, exclusionary practices and a declining sense of belonging and engagement among employees. Furthermore, it would affect the ability to attract and retain talent, build diverse, inclusive and innovative teams, as well as undermine the credibility of Essity’s brands that have a DEI profile. Essity takes proactive measures to create an inclusive environment and prevent inequalities and inequities, which otherwise could lead to decreased productivity and innova- tive capacity and poor decision-making. Upstream activities Own operations Downstream activities Contents 83Essity | Annual Report 2024Sustainability statements | S – Social disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures | Own workforce Workers in the value chain Consumers and end-users Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Own workforceS The risk with neglecting DEI or being unsuccessful in our efforts, is that we become less able to attract and retain the talent pool we need for our business to thrive, that our culture is undermined and that negative behaviors become common. Worst case, this may result in excluding and even harassing behavior and discriminatory practices in the workplace. This would also then decrease employee engagement and our overall innovation capacity. Long-term, this could negatively impact our credibility in the marketplace, our corporate brand as well as some of our category brands. Therefore, Essity takes proactive measures to create an inclusive environment and prevent inequalities and injustices. In short, DEI is the right thing to do, the smart thing to do, and who we are and want to be as a company. Gender equality and equal pay At Essity, we recognize equal pay for work of equal value as critical in attracting and retaining the best talent in the market. It is also of utmost importance to improve diversity, motivation and productivity for all our employees. Increased gender pay gaps pose a potential risk to Essity’s workforce by higher turnover rates and heightened employee dissatisfaction. This could ultimately result in the under-representation of women within the organization. To address unjustified pay gaps and promote equal treatment, Essity annually reviews salary practices as part of the regular salary process. Training and skills development Essity contributes to a positive impact on its employees by offering continuous education and skills develop- ment. Only if we manage to do this successfully, will we be able to deliver on our commitments. To deliver on our business strategy, Essity is dependent on a skilled and competent workforce. By continuing to invest in our workforce development, we demonstrate our commitment to our employ- ees, leading to higher levels of engagement, job satisfaction and upskilling. This is particularly important in today’s environment, where economic pressures and evolving work models demand a resilient and adapt- able workforce. Investments in our employees reduce the risk of employees leaving Essity for other chal- lenges and foster a culture of continuous improvement and innovation, which is essential for Essity to continue being a successful company. Impact, risk and opportunity management Policies related to our own workforce We are fostering a positive and inclusive work environment through processes and tools, in line with com- prehensive policies. These policies support our employees’ health and safety, our DEI agenda and gender equality and equal pay. For more information on Essity’s policies related to our own workers, see pages 51–52. Essity’s Global RESH Policy Essity is committed to further enhance safe and equal working conditions for our own employees. Therefore, Essity has further developed its Global RESH Policy that addresses the topic of health and safety among our employees. The policy serves as the primary guiding document, underlining the company’s commitment to provide a safe and healthy work environment. The policy addresses areas such as Essity’s zero incident men- tality, meaning no one should be injured or harmed while at work, and is also based on ISO 45001. The pre- vention of serious injuries is of the utmost importance to Essity, and we work proactively to minimize the risk of injuries. The Diversity Policy The Diversity Policy outlines Essity’s commitment to fostering an inclusive workplace culture. The policy addresses equal treatment and opportunities for all as well as describing the importance of working with DEI. Furthermore, it emphasizes Essity’s commitment to provide a workplace free of harassment and discrim- ination, as well as how to report on any breaches related to this commitment. At Essity, all employees are treated with dignity and respect and are given equal opportunities to develop their careers. Moreover, Essity works systematically to prevent discrimination based on gender, ethnicity, religion, disability, sexual orienta- tion, age or other grounds for discrimination protected by law. Gender equality and equal pay Essity has a Renumeration Policy designed to promote equal treatment and opportunities for all employees. The policy is based on providing market-competitive compensation. The Remuneration Policy aims to support the company’s long-term interests, including its sustainability. Processes for engaging with our own workers and workers’ representatives about impacts Essity is committed to have an open and transparent dialogue with our employees and employee representa- tives to ensure that our employees’ voices are heard, and their concerns are addressed. Our key processes for engagement include: • Continuous dialogue between employee and line-manager • MyVoice Employee Engagement Survey • Meetings and collaborations with unions and work councils • Global RESH Committee • Whistleblower system, read more on page 98 Essity encourages regular dialogues between employees and line managers and strives for line managers to agree and document employees’ goals and individual development, which in turn enables individual training and skills development. The MyVoice Employee Engagement Survey is conducted bi-annually to give employees the opportunity to share their experiences and views. The survey includes specific questions on DEI with the purpose of identifying gaps related to gender, generation or employment. At regular intervals, Essity facilitates work- shops to follow up on the results and create strategies to solve identified issues. To further engage with our employees and facilitate our DEI agenda, Essity runs an initiative called Courageous Conversations. It includes a global community of 70 facilitators that run in-person and virtual DEI discussions. In 2024, more than 80 such conversations were held. The initiative also includes a podcast, which is available on Spotify, and several toolboxes for managers to use in day-to-day business. Courageous Conversations have been recognized by Catalyst, a global not-for-profit leading DEI organization, as a “global practice” and were also recognized by the employee organization Ledarna as the 2024 initiative of the year. By the end of 2024, Courageous Conversations had gathered more than 4,500 participants from Essity, and the podcast had more than 3,000 listeners, both employees and external parties. To further strengthen Essity’s DEI commitment, the company has become a member of LEAD, a European network that promotes DEI in the retail and consumer goods industry. Essity has also become a member of the Unstereo- type Alliance, a UN Women-convened initiative that aims to eradicate harmful stereotypes in media and advertising content. The Unstereotype Alliance provides insights on talent attraction and employer branding in media advertising. Our membership supports our work to ensure equal opportunities for our employees. Contents 84Essity | Annual Report 2024Sustainability statements | S – Social disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures | Own workforce Workers in the value chain Consumers and end-users Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Own workforceS Essity undergoes numerous changes that necessitate the provision of information to, and consultation with, employee representatives at all levels of the organization. This process takes place several times a year at global, European and local country levels, when consultations are required prior to any organizational changes, and for providing ongoing information to ensure transparency and foster constructive social dia- logue. On these occasions, topics such as financial performance, organizational changes, health and safety and employment conditions are discussed. Since 2020, Essity has had a Global RESH Committee, comprising the President Global Supply Chain, Vice Presidents, RESH directors and workers’ representatives from all parts of the company. This committee addresses all relevant health and safety topics. Additionally, key performance indicators (KPIs) are utilized to monitor the monthly performance of each business unit. Processes to remediate negative impacts and channels for our own workers to raise concerns Essity is committed to address and remediate negative impacts on our workforce and to provide effective channels for employees to raise concerns. Essity encourages an open and honest culture, in which all employees can report suspicions of violations of the Code of Conduct or legislation in the whistleblower system. A detailed description of Essity’s whistleblower system is found on page 98. Topics related to DEI, combined results in the MyVoice survey, as well as the collective feedback from our Courageous Conversations are followed up regularly and are the base for establishing our priorities moving forward. Regarding health and safety matters, Essity sets up remediation plans every year based on the “I Care” program, results from audits, technical visits in our production facilities and decisions taken in the Global RESH Committee to decrease the negative impact on own employees. Taking action on material impacts, risks and opportunities for our own workforce and effectiveness of those actions Essity addresses material impacts, risks and opportunities related to our employees through strategic actions and regular assessments of progress and effectiveness. The effectiveness of Essity’s actions is evaluated through targets and metrics within the most material sustainability matters: health and safety, diversity, gender equality and equal pay, as well as training and skills development. Health and safety Essity takes a proactive approach to working with health and safety, which means that we continuously identify and mitigate risks, seize opportunities to enhance employees’ well-being and evaluate the effective- ness of our actions. Essity’s health and safety strategy has the following key focus areas: • To reduce total recordable injuries (TRI) • To reduce occasions for potential serious injuries • To improve Essity’s health and safety culture • To foster safety leadership To decrease the negative impacts, Essity sets up annually global objectives, targets, strategies and measure- ments that all production facilities take part in. The key elements of these actions, established in 2022, include upgrades to the following processes: machine safety risk assessment, job safety analysis, traffic management, warehouse safety, tool safety, isolation of hazardous energies, work permit and contractor management. Life-saving rules were renewed by providing more guidelines for highest-risk tasks within the production facilities. The upgrades to the safety processes are aligned with the ISO 45001 principles and allow Essity to work systematically to achieve continuous improvements. The strategy focuses on technical improvements as well as building a sustainable culture through the “I Care” program. In 2022, Essity launched a Safety Leadership training, a fundamental component of the “I Care” program, which provides tools to our leaders on how to improve safety in the workplace. As a com- plement to the Safety Leadership training, Essity implemented a roadmap for technical safety in 2024, as well as a health and safety framework, with the aim of Essity being best-in-class and reducing the occurrence of incidents that could result in fatalities. Through the “I Care” program, Essity promotes the opportunity to cultivate a workplace with a focus on health and safety. Essity continues to implement the international standard ISO 45001 to ensure that uniform processes are used and that Essity’s production facilities continuously strive to improve workplace-related health and safety. Essity has developed a management system framework in which employees can access global proce- dures and tools for internal compliance to ensure they fulfill ISO standards. In 2023, Essity initiated an important project focusing on the well-being of front-line workers, which was continued in 2024. Essity will also, in collaboration with universities and medical researchers, establish a scientific approach to designing and developing healthier working stations, routines, environments and conditions for our operators. A health and safety survey is conducted every third year to evaluate Essity’s progress in the area. The results provide an assessment of our health and safety culture which in turn allows us to identify strengths, opportunities and eventual gaps in our health and safety management system. The survey encompasses all employees at Essity’s manufacturing sites and informs continuous improvement efforts and strategies. In 2024, the second edition was conducted to continue assessing progress in fostering a safe and healthy culture. The response rate increased from 67% to 73%, and the overall score increased from 54.9 to 66.8 out of 100, positioning Essity on a positive trajectory regarding the health and safety culture. Diversity, equity and inclusion Essity’s efforts regarding DEI are essential for attracting, recruiting and retaining talents. Through all avail- able channels and dialogues, Essity gathers information on how to better include all employees, in all their uniqueness. Within the DEI agenda, we have a particular focus on reinforcing inclusion based on dimensions such as gender, ethnicity, religion, disability, sexual orientation, age or other grounds for discrimination protected by law. We have three concrete ambitions within DEI: • Ensure an inclusive workplace for all • Have a gender-balanced leadership; no gender should represent more than 60% • Accelerate our transition to reflect under-represented groups Contents 85Essity | Annual Report 2024Sustainability statements | S – Social disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures | Own workforce Workers in the value chain Consumers and end-users Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Own workforceS To achieve these ambitions, we have a global DEI strategy, roadmap and metrics in place consisting of the following areas: • Reinforce an inclusive culture, based on our Beliefs & Behaviors • Develop and promote inclusive leaders • Recruit and promote to increase diversity • Integrate DEI in all people processes to ensure they are fair, transparent and free from bias • Leverage Inclusive Procurement and Supplier Diversity Program • Fulfill diverse customer needs through more inclusive products, brands and marketing • Support communities in line with our purpose and the SDGs A focus area for Essity is to develop our managers to become inclusive leaders, enabling them to shape and reinforce an inclusive corporate culture for all. We have several learning resources in place to support man- agers on all levels. The MyVoice Employee Engagement Survey shows that progress has been made in the DEI area. It provides valuable insights into continued efforts, confirming the company’s commitment to maintain an inclusive workplace culture. By nurturing an inclusive culture, Essity builds a workforce motivated by a clear purpose and vision. This is not only about attracting talent but also recognizing that a diverse workplace fosters innovation and increases employee satisfaction. Essity strives to make the recruitment process fair, transparent and free from bias. As DEI is embedded in all of Essity’s key processes referring to employees, it is also a part of the follow-up called Talent Review. Also, Essity annually monitors distribution from a nationality, age and gender perspective for all employees and at all management levels to ensure no systematic biases. In addition, the Executive Management Team receives a comprehensive DEI update three times a year. With the internal strategy founded on an inclusive workplace culture, the company also navigates the diverse demands of the external audience. Gender equality and equal pay Essity is committed to addressing and eliminating gender pay gaps in line with its Remuneration Policy. By having a consistent and structured DEI strategy, Essity creates a workplace environment promoting equal opportunity, in turn driving innovation and ensuring profitable growth. In the MyVoice Employee Engage- ment Survey, there are specific questions addressing DEI that aim to identify any perceived issues. Training and skills development Essity is dedicated to fostering a culture of continuous learning and personal growth for our employees. We place a strong emphasis on the upskilling of our employees, ensuring they are equipped with the exper- tise and knowledge to excel in their roles. Through annual performance reviews and tailored individual development plans, we offer structured opportunities for professional and leadership development, helping each employee to reach their full potential. The learning opportunities for our employees, offered by the Academies, are generally based on the 70-20-10 model. Most learning of our employees (70%) should come from daily on-the-job practice, 20% from learning through others, such as colleagues, mentoring, and coaching, and 10% from training pro- grams. All the above are supported by a learning management system (LMS), Workday, performance and IDP modules and SharePoint sites such as The Leadership Center and The Essity University site. Employees and line managers assess the progression of performance and individual development plans throughout the year using a global process. As part of that, they identify priorities to ensure a proper skill set for present and future roles. Progression and impact are measured by a set of quantitative and qualitative KPIs from the MyVoice Employee Engagement Survey. To further improve the employee experiences and opportunities for upskilling, Essity is piloting a new learning and talent development platform. Based on their current roles and future aspirations, employees will be able to prioritize areas for both leadership and functional upskilling in conversation with their line managers, enhancing their proficiency levels. Line managers and employees select appropriate learning solutions to address skill gaps or expand capabilities. These solutions may include training, mentoring, projects and an access to Essity’s internal job portal and offer modern knowledge-sharing tools as well as AI-based career guidance to drive employees across different future job opportunities. Essity ensures that employees receive the necessary upskilling through a combination of internal Functional Academies and external programs. Contents 86Essity | Annual Report 2024Sustainability statements | S – Social disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures | Own workforce Workers in the value chain Consumers and end-users Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Own workforceS Diversity Essity’s DEI work is guided by three overarching ambitions: • Provide an inclusive working environment for all • Achieve gender-balanced leadership at all levels, where gender distribution at all Essity management levels (Executive Management Team, senior management, middle management) is to be within the interval 40/60%, with the majority group to constitute no more than 60% • Accelerate our transition to reflect under-represented groups among our employees Staff mobility 2024 2023 20221) 20211) 20201) Number of employees who joined the Group 5,478 5,763 9,380 9,278 6,891 of whom through acquisitions – – 425 677 190 Number of employees who left the Group 5,049 6,575 7,625 7,256 7,402 due to divestments – 1,435 – 20 9452) due to restructuring 422 442 243 105 260 due to retirement 407 420 513 468 443 of which temporary employees 881 625 756 959 1,939 Personnel turnover, excluding restructuring, retirement, divestment, temporary employees, % 9 10 13 12 8 1) Vinda has been included for years 2020–2022. 2) Since the divestment of Sancella Tunisia occurred at the end of the year, these are included in the average number of employees in 2020. Employees1) 2024 2023 2022 20214) 2020 Men Women Non- binary Gender-not- declared Total Total Total Total Total Average employees, number 23,582 11,911 16 36 35,545 36,013 47,572 46,275 46,084 Men/women, %2) – – – – 66/34 67/33 65/35 65/35 65/35 Permanent employees, number 22,379 11,248 12 28 33,667 34,166 38,955 37,460 37,398 Temporary employees, number 1,203 662 4 8 1,878 1,847 8,617 8,815 8,686 Permanent/temporary employees, %3) – – – – 95/5 95/5 82/18 81/19 81/19 Full-time employees, number 23,244 10,949 8 21 34,221 34,777 46,078 44,633 44,890 Part-time employees, number 338 962 8 15 1,324 1,236 1,494 1,642 1,194 of whom women – – – – 962 902 978 968 875 Full-time/part-time employees, % – – – – 96/4 97/3 97/3 96/4 97/3 Employees in discontinued operations, number – – – – – 11,9035) – – – 1) Relates to average headcount number of employees during the year and calculated as an average over five quarters. There are no non-guaranteed hours employees. Details on FTEs can be found in note B2b, see page 137. 2) Essity uses four gender alternatives in our personnel data: men, women, non-binary and gender-not-declared. Considering that the size of the non-binary and gender-not-declared groups is negligible, these are not presented separately. 3) Fixed-term employees in China with three or six-year contracts are classified as temporary employees for years 2020–2022. 4) Companies acquired in December 2021 (AquaCast Liner and Hydrofera) are not included in the 2021 numbers. 5) Vinda has been included for years 2020–2022. In the year 2023 Vinda was classified as a discontinued operations. Targets and metrics Targets related to managing material negative impacts, advancing positive impacts as well as managing material risks and opportunities Health and safety Essity uses a variety of inputs to establish health and safety targets, including historical performance data, survey results, audit findings, insights and the needs and expectations of both external and internal stake- holders. Each month, the health and safety performance is reviewed by the RESH committee. Essity’s group target is a 75% reduction in the total recordable injuries rate (TRI-R) by 2025 compared to 2019, and to continue to conduct purposeful and systematic safety work at all Essity production facilities. Health and safety Decrease in total recordable injuries rate compared with 2019 Target 2025: –75% Outcome: –66% The Total recordable injury (TRI) figure includes Lost time accidents (LTA), Restricted work cases (RWC) and Medical treatment cases (MTC). Gender representation at management level Target: 40/60% Outcome: 34/66% The target is reported at an aggregate outcome level for the three management levels. For the outcome in 2024, 34% were women and 66% were men. 2024202320222021 –43% –39% –58% –66% /zero.tab /two.tab/zero.tab /four.tab/zero.tab /six.tab/zero.tab /eight.tab/zero.tab /one.tab/zero.tab/zero.tab 2024202320222021 Men 68% 32% 68% 32% 68% 32% 66% 34% Women Characteristics of employees The tables describe key characteristics of the employees in Essity’s own workforce. Essity is committed to offering a work environment that contributes to a long-term sustainable working life. The company encourages an open culture and that employees are aware of and take immediate action against conditions, actions and behaviors that increase the occurrence of incidents that violate our targets. Read more about Essity’s DEI strategy and DEI key initiatives on page 86. Contents 87Essity | Annual Report 2024Sustainability statements | S – Social disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures | Own workforce Workers in the value chain Consumers and end-users Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Own workforceS Collective bargaining coverage and social dialogue Essity recognizes the right of every employee to be a trade union member and to participate in union activi- ties. The company meets with employee organizations at various levels on a regular basis to inform them of and discuss issues such as the company’s results, organizational changes, health and safety as well as employment terms and conditions. Essity also has an agreement with the IndustriALL Global Union. When there is no union representation, Essity establishes other channels where possible, such as an employee council. We also support The Global Deal partnership, which has members from the private and public sectors. The purpose is to improve dialogue between parties in the labor market and national governments. Employee relations1) 2024 2023 20222) 2021 2020 Employees covered by collective bargaining agreements, % 62 62 60 67 68 1) Refers to companies fully integrated into the HR platform. 2) The change in 2022 compared to 2021 is due to additional Latin American countries being included in the HR platform in 2022. These countries have a relatively low number of employees covered by collective bargaining agreements. Diversity metrics The tables below describe key diversity metrics for Essity. Keeping track of these metrics is of importance to ensure progress and deliver on Essity’s ambitions to create an inclusive working environment for all. Overall, there has been solid progress in 2024. Board of Directors diversity metrics 2024 2023 2022 2021 2020 Number % Number % Number % Number % Number % Board members (elected by the AGM) of whom women 4 44 4 44 4 40 4 44 5 56 of whom men 5 56 5 56 6 60 5 56 4 44 Board members (appointed by trade unions) of whom women 2 67 1 33 1 33 1 33 1 33 of whom men 1 33 2 67 2 67 2 67 2 67 Board members (total) of whom women 6 50 5 42 5 38 5 42 6 50 of whom men 6 50 7 58 8 62 7 58 6 50 Diversity Metrics Management Team 2024 2023 2022 2021 2020 Number % Number % Number % Number % Number % Executive Management Team of whom women 4 31 4 31 4 33 4 31 3 25 of whom men 9 69 9 69 8 67 9 69 9 75 Senior Management Team1) of whom women 38 35 39 35 38 35 35 34 30 31 of whom men 71 65 72 65 71 65 69 66 68 69 Middle Management Team1) of whom women 237 34 215 32 209 31 195 31 177 29 of whom men 451 66 455 68 457 69 427 69 430 71 Total gender distribution at management levels above, women/men 34/66 32/68 32/68 32/68 29/71 1) Refers to companies fully integrated into the HR platform. Nationalities1) 2024 2023 2022 2021 2020 Total number of nationalities 135 131 130 124 117 Number of nationalities in Executive Management Team (number of members) 6 (13) 6 (13) 6 (12) 6 (13) 6 (12) Number of nationalities in senior management (number of senior managers) 17 (109) 17 (111) 19 (109) 19 (104) 18 (98) Number of nationalities in middle management (number of middle managers) 48 (688) 48 (670) 48 (666) 44 (622) 44 (607) 1) Refers to companies fully integrated into the HR platform. Share of employees by age group 2024 2023 2022 2021 2020 Number % Number % Number1) % Number1) % Number1) % Under 30 years old 6,618 18 6,663 19 9,529 20 9,037 19 8,898 19 30–50 years old 19,188 54 18,923 53 28,414 58 27,925 59 27,478 60 Over 50 years old 10,023 28 9,946 28 10,632 22 10,166 22 9,648 21 1) Vinda has been included for years 2020–2022. Employees by country1) 2024 Germany 5,075 Mexico 4,000 Colombia 3,561 Other countries 22,909 Total 35,545 1) Country level data is disclosed for countries representing at least 10% of total number of employees and calculated as an average headcount over five quarters. Contents 88Essity | Annual Report 2024Sustainability statements | S – Social disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures | Own workforce Workers in the value chain Consumers and end-users Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Own workforceS Training and skills development metrics Training and skills development activities for continuous professional growth are a fundamental part of employees’ everyday lives and take place through on-the-job experiences, project assignments, training and social learning activities. Employee experience and engagement are monitored and addressed through the bi-annual MyVoice pulse surveys and team conversations. Essity also offers individual training and development based on business and role requirements and per- sonal strengths. Essity offers participation in leadership and functional academies as well as a range of social learning programs. The company is continuing the shift from traditional to digital learning, exploring recent technologies to allow learning to be a natural part of day-to-day work. Health and safety metrics Some of our main metrics are TRI and TRI-R. The TRI number in 2024 was 120, while the TRI-R outcome in 2024 was a decrease of 66% compared with 2019. The figures pertain to wholly owned companies of Essity and exclude sales and administrative offices. There were no work-related fatalities for our own workforce or other workers at Essity’s facilities in 2024. The number of cases related to recordable work-related ill health was zero in 2024. Culture and development1) % 2024 2023 Long-term goals Individual goals 66 64 100 of which white collar employees 90 90 100 Individual development plans2) 50 47 100 of which white collar employees 82 79 100 Employee engagement 78 78 above global benchmark 1) Refers to companies fully integrated into the HR platform. Excluding blue collar employees that record their goal-setting outside the HR platform. 2) Individual goals are measured on a continuous basis. Number of internal training hours1) 2024 2023 2022 2021 2020 Total number of internal training hours, thousand 374.9 284.0 215.9 210.0 166.8 of which digital training sessions, thousand²) 131.9 99.1 104.3 89.6 93.6 of which virtual sessions, thousand 161.7 115.0 77.4 92.2 40.9 of which physical training sessions, thousand 81.3 69.9 34.2 28.2 32.3 Number of training hours per employee 11 8 7 7 6 1) Refers to companies fully integrated into the HR platform. 2) Includes training initiatives outside the global learning management platform. Investments in skills-enhancement activities 2024 2023 20221) 20211) 20201) Total, SEKm 192 179 155 136 115 Per employee, SEK 5,395 4,971 3,249 2,940 2,500 Value added per employee, SEK 1,315 1,189 783 775 826 Return on human capital 1.64 1.55 1.34 1.58 1.73 1) Vinda has been included for years 2020–2022. Sickness absence % 2024 2023 2022 2021 2020 Sickness absence, %1) 5.7 5.6 6.1 5.2 5.3 Scope of reporting, % of companies integrated into the HR platform 48 47 49 54 56 1) Sickness absence is calculated using the number of hours absent divided by the number of working hours. Internally appointed vacancies1) % 2024 2023 2022 2021 2020 Vacancies appointed through internal candidates 25 23 20 20 23 1) Refers to companies fully integrated into the HR platform. Accidents1) 2024 2023 2022 2021 2020 Fatalities, employees (F) – – – – – Lost time accidents (LTA) 104 116 157 142 126 Restricted work cases (RWC) 5 6 23 12 4 Medical treatment cases (MTC) 11 24 32 37 187 Total recordable incidents (TRI) 120 146 212 191 317 Total recordable incident rate (TRI-R, TRI/1,000,000 WH) 2.6 3.2 4.7 4.2 6.9 Total recordable incident rate, IR (TRI-IR) (TRI/200,000 WH) 0.5 0.6 0.9 0.8 1.4 Lost time accident frequency rate (LTA-FR), (LTA/1,000,000 WH) 2.4 2.7 4.0 3.4 2.8 Lost time incident rate (LTA-IR) (LTA/200,000 WH) 0.5 0.5 0.8 0.7 0.6 Contractor fatalities (CF) – – 1 2 – Contractor lost time accidents, CLTA 21 25 31 35 30 Zero recordable incident sites (based on TRI) 35 26 20 23 13 Number of sites included in reporting 83 81 80 78 74 Working hours (WH), (1,000,000) 45.5 45.4 45.4 45.3 45.8 1) Pertains to wholly owned production facilities of Essity, excluding sales and administrative offices. Contents 89Essity | Annual Report 2024Sustainability statements | S – Social disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures | Own workforce Workers in the value chain Consumers and end-users Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Own workforceS Remuneration metrics Gender pay gap Reported in the sustainability statements up to and including 2023 we displayed median wage of women compared to men for Essity’s 10 biggest countries by headcount. From 2024 onwards, the gender pay gap is reported in the table below as a percentage. For 2024 the pay gap is 6%, which indicates that the average salary for women is 6% less than the average salary for men. Incidents, complaints and severe human rights impacts For information about the incidents reported in the category human rights through the whistleblower system, see table on page 99. There were no financial fines, penalties or compensation for damages because of incidents concerning human rights during 2024. Average combined salary1) % 20232) 20222) 2021 2020 Women’s median wage compared with men's (men's wage 100%) 94 94 94 93 Women's median wage compared with men's in senior management (men's wage 100%) 86 81 80 78 Women's median wage compared with men's in middle management (men's wage 100%) 90 91 91 92 1) The figures reflect the women’s median wage compared to men’s median wage, where men’s wage is referred to as the 100%. The combined salary does not take into consideration factors affecting compensation levels, such as job role, experience and education levels. Salary includes annual base salary, vacation pay, short-term incentive pay, sales incentive pay and long-term incentive pay. 2) Applies to full-time salaries for active employees from the 10 countries where Essity has the most employees. Salaries to the CEO, Executive Vice President and CFO are excluded. Only refers to companies fully integrated into the HR Platform. Russia is not included. Gender pay gap, average hourly pay1) % 2024 Women/Men 6 1) The figures reflect the gender pay gap based on average hourly pay. The hourly pay does not take into consideration factors affecting compensa- tion levels, such as job role, experience and education levels. Pay includes annual base salary, short-term incentive pay, sales incentive pay, long- term incentive pay, shift premium and overtime pay. Salary to the CEO is excluded. Only refers to companies fully integrated into the HR Platform. Total remuneration For the total remuneration ratio of the President and CEO divided by the median salary at Essity, see Note C2 on page 145. Contents 90Essity | Annual Report 2024Sustainability statements | S – Social disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures | Own workforce Workers in the value chain Consumers and end-users Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Workers in the value chainS Workers in the value chain Sustainability matters Value chain Material impact Financial effect Working conditions: Working time Actual negative impact No financial effect Working conditions: Health and safety Actual negative impact No financial effect Other work-related rights: Forced labor Potential negative impact No financial effect Strategy Interests and views of stakeholders Essity has an established process to perform continuous risk assessments of the company’s suppliers and procurement categories in accordance with Essity’s Global Supplier Standard. It contains requirements con- cerning quality, product safety, the environment and chemicals. It also contains a Supplier Code of Conduct that includes Essity’s expectations regarding human rights (trafficking, forced labor, compulsory labor and child labor), employee relations, health and safety as well as business ethics. The Supplier Code of Conduct is based on Essity’s Code of Conduct, related legislation and international standards, see pages 51–52. To verify that our suppliers operate in line with our Supplier Code of Conduct, we apply a systematic and risk-based approach in accordance with the OECD Guidelines for Multinational Enterprises. All our suppliers are expected to follow these principles and to require their suppliers in turn to uphold equivalent standards. Compliance with these principles is a key factor when choosing suppliers and other business partners. Systematic activities, such as self-assessments, audits, screenings and other monitoring processes, ensure compliance. Essity requires that suppliers use Supplier Ethical Data Exchange (Sedex), a global mem- bership organization that provides businesses with a platform to manage and share information about their supply chain standards, to conduct a self-assessment linked to working conditions, environment, business ethics as well as health and safety. Suppliers of raw materials and finished products located in countries that Sedex considers high-risk countries, with regards to workers in the supply chain, undergo an ethical audit that focuses on areas such as human rights, employment conditions and corruption. The preferred audit format is Sedex Ethical Trade Why workers in the value chain matter As a global company, Essity collaborates daily with over 32,000 suppliers and has a significant impact on workers throughout its value chain. Essity’s focus on workers in the value chain is based on the ambition to mitigate risks and positively contribute to social and economic developments in the communities which we impact through our work. We are committed to upholding the highest standards of labor rights and working conditions throughout our value chain. Audit (SMETA), which is the most widely used method in the world for social and ethical audits. Another con- scious choice we make to further reduce the social and ethical risks within the supply chain is to partner with large multinational corporations based in Europe and the USA with production facilities located in Asia and South America. Essity takes supplier location and origin of raw material into consideration when assessing risks. The same material can entail different risks depending on the area where it is manufactured or grown, whereas other items can have similar risks regardless of where they are produced and delivered. The technology used, the level of automation and the level of skill required by the workforce are other factors that are taken into consideration in Essity’s risk assessments. Some raw materials, such as wood pulp or cotton, are closely associated with specific regions due to natural circumstances. The risks with these materials, connected to workers in the supply chain, are often considered to primarily occur several tiers away, in the beginning of the value chain. Essity takes additional measures in these situations, such as audits of sub suppliers or chooses certified raw materials that guaran- tee more sustainable extraction and production. Material impacts, risks and opportunities and their interaction with strategy and business model While workers in the downstream value chain are of interest to Essity, the double materiality assessment has identified material impacts only in the upstream value chain, which are described below. Working time Essity has identified excessive working hours as a matter with a negative impact on workers in the supply chain. This is common among suppliers located in parts of Asia and where there is a high share of migrant labor. The Essity Global Supplier Standard requires that working hours comply with national laws and local industry standards. Excessive overtime leads to poor work-life balance and can contribute to workplace accidents through fatigue and in the long run to wear and tear injuries. Overtime is verified in SMETA audits and Essity is aware of its responsibility to avoid contributing to additional overtime. We do this by striving for correct forecasting and avoiding last-minute changes and unrealistic project timelines. Health and safety Health and safety issues at the workplace have a negative impact on workers in the supply chain. Essity requires that suppliers should respect relevant local legislation in this area, as well as the ILO Core Conven- tions as expressed in our Supplier Code of Conduct. Essity also demands that suppliers have a Health and Safety Management System providing for continuous monitoring and improvement of the working environ- ment. All our suppliers are required to provide relevant information to enable us to fulfill our obligations regarding occupational health and safety. Verification of a supplier’s Health and Safety Management System is part of the qualification audits that are mandatory for all strategic suppliers. This also constitutes an important element in the SMETA audits Essity requests for suppliers with manufacturing in high-risk regions. If nonconformities are discovered, a corrective action plan is established and followed up on. Upstream activities Own operations Downstream activities Contents 91Essity | Annual Report 2024Sustainability statements | S – Social disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures Own workforce | Workers in the value chain Consumers and end-users Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Forced labor Our impact with regards to forced labor in the supply chain is potentially negative. Applying Essity’s risk- based approach and using our supporting tools and analysis instruments, we judge that the risk for forced labor is predominantly in lower tiers, beyond direct suppliers, in parts of Asia and in Latin America. The risks are mainly within farming and agriculture and for Essity, these risks are associated with the cotton industry. Forced labor can also occur in industries using migrant workers. In this case the problem is not limited to the early stages of the supply chain and is most common, according to our analysis, in Asia and in parts of the Middle East. Forced labor can occur during the production of raw materials or even finished goods. For vulnerable workers such as refugees or unskilled migrant workers, the risk is global. Special caution should therefore be applied depending on business areas, such as facility management, waste management, plantation work and many other low skilled services, rather than on region or geography. Impact, risk and opportunity management Policies related to value chain workers Essity is committed to upholding the highest standards of labor rights and working conditions throughout our supply chain. By sourcing from suppliers who share the same values as those outlined in our Global Supplier Standard, we continuously promote responsible business practices and respect for human rights in our supply chain. Essity’s Global Supplier Standard contains a Supplier Code of Conduct that includes our expectations on all our suppliers regarding human rights (trafficking, forced labor, compulsory labor and child labor), business practices and working time, employee relations, health and safety and other topics related to sustainable and responsible business practices. Compliance with these principles is a key factor when choosing suppliers and other business partners. Essity is a member of the UN Global Compact, which consists of ten principles in the areas of human rights, labor standards, the environment and anti-corruption. Our Supplier Code of Conduct is based on legislation and internationally agreed standards, see pages 51–52. A risk-based approach, in accordance with the OECD Guidelines for Multinational Enterprises and the UN Global Compact, is applied to ensure that our global suppliers operate in line with our Supplier Code of Conduct. Essity requires that suppliers use Sedex to conduct a self-assessment linked to working conditions, environment, business ethics as well as health and safety. Third-party SMETA audits at suppliers’ sites are used to verify compliance and to identify and address potential social and ethical issues. For more information on Essity’s Supplier Code of Conduct, see pages 51–52. Processes for engaging with value chain workers about impacts At Essity, we recognize the critical role that supply chain workers play in our operations and we are commit- ted to ensure that their voices are heard and that their concerns are addressed. Our engagement processes are designed to foster open communication, promote fair labor practices and continuously improve working conditions. Through regular audits, surveys and direct feedback mechanisms, we actively involve supply chain workers in identifying and addressing impacts related to our business activities. We engage third-party auditors to conduct SMETA audits at our suppliers’ sites. The audits are an indepen- dent assessment of the working conditions and secure access to workers’ feedback. Through this we can identify issues and areas for improvement related to health and safety and labor rights, such as working time. We also engage with workers in our supply chain via industry-wide networks such as AIM-Progress, a member-led forum of fast-moving consumer goods (FMCG) companies and suppliers. Together with other FMCGs, we support responsible business conduct to make sure that supply chains remain resilient and that workers, farmers and communities can thrive. Yet another way to engage with workers is through special initiatives and in collaboration with non- governmental organizations. In Latin America for instance, Essity is contributing to the official recognition of waste pickers and the important role they have in a more circular society. Through Essity and the Familia Foundation, waste pickers and their families in Colombia are getting better access to housing, education and libraries. Feedback from these engagements is integrated into our decision-making processes to enhance our social responsibility initiatives. Processes to remediate negative impacts and channels for value chain workers to raise concerns We are committed to addressing and remediating any negative impacts on supply chain workers promptly and effectively. We have established robust processes to ensure that any issues are identified, addressed and resolved in a timely manner. When SMETA audits identify non-compliance with labor standards, we work with our suppliers to develop and implement corrective action plans. These plans include specific steps, timelines and follow-up audits to ensure issues are resolved. During 2024, Essity evaluated the outcome from 75 ethical supplier audits carried out in Mexico, Colom- bia, Sri Lanka, South Africa, Turkey, Brazil, Argentina, India, Taiwan, the United Arab Emirates and Malaysia. Six of these audits were initiated by Essity using an independent audit firm. The other 69 ethical audits, which meet Essity’s requirements, were conducted at the initiative of other customers to the suppliers and were approved by Essity. Essity is informed within 24 hours in the event of critical observations. No agree- ment with strategic suppliers related to workers in the supply chain were terminated during 2024. Essity encourages an open and honest culture in which all external stakeholders, including workers in the supply chain, can report suspicions of violations of our Supplier Code of Conduct or other legislations. Retaliation against individuals who submit reports in good faith is not accepted. Essity offers external stakeholders several channels to report violations. Workers in the value chainS Ethical audits conducted 2024 2023 2022 2021 2020 Audits initiated by Essity1) 6 12 4 14 12 Audits initiated by customers2) 69 43 41 35 25 Total number of audits 75 55 45 49 37 1) Audits initiated by Essity were conducted by Essity’s independent audit firm in accordance with SMETA’s 4-pillar format. 2) Customer-initiated audits have been conducted on behalf of other customers of the suppliers and approved by Essity. Contents 92Essity | Annual Report 2024Sustainability statements | S – Social disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures Own workforce | Workers in the value chain Consumers and end-users Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Share of total purchasing spend1) from suppliers that comply with Essity’s Global Supplier Standard 2024 2023 2022 2021 2020 Outcome, % 94 92 90 88 83 1) Excluding energy. Taking action on material impacts on value chain workers and approaches to managing material risks and pursuing material opportunities related to value chain workers and effectiveness of those actions We are dedicated to taking proactive measures to address material impacts on supply chain workers. Our approach involves identifying and mitigating risks, seizing opportunities to enhance worker well-being and continuously evaluating the effectiveness of our actions. For certain high-risk materials, for example cotton, Essity has decided to source only sustainable cotton. Our preferred cotton suppliers are members of the Better Cotton Initiative (BCI), an organization which pro- vides a rigorous and continuous assurance program, including yearly self-assessments and external assess- ments/audits at farm level to secure continuous improvement and evidence-based learning. Essity closely monitors the rapid changes in the legislative landscape regarding the obligation to perform due diligence as well as other trade-based legislation. Procedures are updated on a regular basis and key personnel are trained to ensure that risk assessments are conducted properly and that there is relevant documentation and transparency. Essity has an established process to perform continuous risk assessments of the company’s suppliers and procurement categories. Approximately 54% (54; 54) of Essity’s strategic suppliers of raw materials and finished products are in Europe, 37% (37; 36) in North and South America and 9% (9; 10) in Asia and Africa. At the end of 2024, Essity had a total of 1,020 (958; 956) suppliers that shared data via Sedex. Geographical distribution of strategic suppliers 2024 Europe, 54% North and South America, 37% Asia and Africa, 9% Targets and metrics Targets related to managing material negative impacts, advancing positive impacts and managing material risks and opportunities Essity’s target for responsible procurement, which is based on our total purchasing spend excluding energy, is that 95% of the purchasing spend in 2025 should be from suppliers that share the company’s values in accordance with our Global Supplier Standard. Workers in the value chainS Responsible procurement Share of total purchase cost from suppliers that comply with Essity’s Global Supplier Standard Target 2025: 95% Outcome: 94% 2024202320222021 88% 90% 92% 94% Contents 93Essity | Annual Report 2024Sustainability statements | S – Social disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures Own workforce | Workers in the value chain Consumers and end-users Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Consumers and end-usersS Consumers and end-users Sustainability matters Value chain Material impact Financial effect Hygiene and health Actual positive impact Actual positive financial effect (opportunity) Strategy Interests and views of stakeholders Collaboration with internal and external stakeholders is crucial for understanding different perspectives, improving decision-making and enhancing our overall organizational performance and offering. By under- standing the needs and challenges of our consumers and end-users, we ensure the delivery of superior products and solutions that meet those needs. This approach aligns with our strategy and business model. We are committed to being a trusted partner in the local communities where we operate. Through collabora- tions with global and regional non-governmental organizations, we provide education and resources that help individuals fully engage in society, supporting their human rights and fostering greater inclusion. For information on how we work to understand the interests, views, and insights of our consumers and end-users, read more on pages 57–58. Why hygiene and health matter for consumers and end-users Hygiene is essential for maintaining both physical and mental health while preventing the spread of infec- tious diseases. It promotes better health, boosts confidence and enhances overall well-being. Every day, Essity’s innovative hygiene and health solutions reach one billion people globally. However, effective hygiene goes beyond products—it requires the right knowledge and skills. That is why we are dedicated to breaking barriers to well-being and providing individuals with the tools they need to practice proper hygiene and improve their health. Essity enables people to live fuller lives by offering solutions that enhance individual well-being while delivering societal and economic benefits. Through our brands, we aim to break taboos, raise aware- ness, improve accessibility, and enhance standards for hygiene and health. Our goal is to contribute to healthier and more inclusive societies for all. We recognize the vital role of professional and family caregivers and the value they bring to society. Our efforts focus on supporting women+’s health during all stages of life and promoting hygiene educa- tion as a foundation for good health. By raising awareness and providing training in infection prevention routines, we help combat antimicrobial resistance (AMR). Essity aims to promote the knowledge of good hygiene by providing a comprehensive portfolio fostering positive personal behavior and hygiene routines in personal care, hand hygiene and surface care. Material impacts, risks and opportunities and their interaction with our strategy and business model Essity’s business model is based on providing health and hygiene products. Our products and services help people live healthier and more active lives. Therefore, Essity has assessed an actual positive impact on con- sumers and end-users. The effect generates revenue for every product sold and creates an actual financial opportunity. Impact, risk and opportunity management Policies related to consumers and end-users Essity aspires to be the undisputed global leader in hygiene and health. We actively support the sustainable development goals (SDGs) by fostering a healthier and more inclusive society while reducing our environ- mental footprint. While Essity does not have a specific policy on hygiene and health related to consumers and end-users, we remain committed to improving hygiene and health globally. Our commitment to social sustainability is reflected in our strategic actions across our four focus areas: women+’s health, the care economy, hygiene and sanitation, as well as infection prevention and control, with roadmaps and initiatives established within each area. We contribute to better public health by driving societal and systemic changes in collaboration with private sector players, public sector stakeholders, and civil society. Rising life expectancy and global population growth drive greater demand for accessible, preventive hygiene and health products, solutions and services. According to the World Health Organization (WHO), approximately 50% of the world’s population still lack adequate access to hygiene and health solutions. The core of our business is promoting solutions that enhance individual well-being while delivering broader soci- etal and economic benefits. We remain dedicated to the long-term support of our consumers and end-users. Women+’s Health The term “Women+” embraces inclusivity by recognizing not only cisgender women but also transgender persons, non-binary individuals, and anyone who faces health and well-being challenges traditionally asso- ciated with women+’s health. This reflects our commitment to understanding and addressing the diverse needs of all individuals, fostering a more inclusive, equitable, and respectful approach to health and rights. Processes for engaging with consumers and end-users about impacts Essity engages with customers, consumers, end-users and society through targeted initiatives. These include community projects, educational programs, partnerships with non-governmental organizations, contributions to research and the use of customer satisfaction ratings. We support communities through foundations, donations, volunteering and sponsorships. To promote hygiene and health awareness, Essity collaborates with end-users and consumers via social media campaigns. Upstream activities Own operations Downstream activities Contents 94Essity | Annual Report 2024Sustainability statements | S – Social disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures Own workforce Workers in the value chain | Consumers and end-users Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Consumers and end-usersS Over the past 16 years, our “The Hygiene and Health Report”, has contributed to the global dialogue, providing insights and actionable recommendations and drive essential changes for societal progress. Taking action on material impacts on consumers and end-users, and approaches to pursuing material opportunities Essity takes strategic action through the following four focus areas: • Women+’s health We are committed to improving the well-being of women+ at all life stages and creating an environment where they, in all their diversity, can live meaningful and fulfilling lives. As a global partner in menstrual health, Essity works to close the menstrual health gap by addressing inequalities that impact well-being. Access to safe, affordable period products and services is essential for enabling full participation in school, work and social life. Essity’s brands help to break barriers and drive positive change in menstrual health worldwide. Our dedication extends to shedding light on taboos around women+’s health, bodies and life stages. We strive to enhance well-being at every age, fostering understanding, support and systemic change for a more inclusive future. Initiatives by Essity’s brands • Product access: Essity’s Modibodi brand, in partnership with Plan International, runs a program in Laos which aims to improve access to reusable period underwear in rural areas. • Access to clean water and sanitation facilities: “Hygiene is our right”, is a joint initiative between UNICEF Mexico and Essity’s Saba and Tork brands. It promotes menstrual hygiene and handwashing practices to support equal school opportunities. • Access to inclusive, accurate information and education: Essity’s Saba brand enhances menstrual health literacy and information through its “Mundo Saba Teens”, providing inclusive and accurate information to young audiences. • Taboo and stigma-free environment: Through campaigns such as V-Land in Roblox by Saba and “It’s never just a period” by Libresse, we aim to normalize menstruation and dispel stigmas surrounding it. Partnerships for women+´s health In 2024, we joined the Global Alliance for Women’s Health, hosted by the World Economic Forum, to collaboratively measure the menstrual health gap and drive meaningful action. Additionally, in partner- ship with the UN sexual and reproductive health agency, Essity became the first global partner to pilot and endorse the sexual and reproductive health and rights metrics developed by the Coalition for Repro- ductive Justice in Business. Essity, Menstruación Digna and UNICEF Mexico conducted the first-ever National Survey on Menstrual Health Management in Mexico. This groundbreaking survey provided valuable insights into how people who menstruate experience and manage menstruation, including its physiological, psychosocial, eco- nomic, social and cultural impacts. Recognized as an impactful tool for change, the findings offer critical guidance for shaping laws and policies to close the menstrual health gap in Mexico. • Care economy Our care and incontinence solutions under the TENA brand help enhance dignity and quality of life for mil- lions of people, including the elderly and caregivers. With our solutions and initiatives, we strive to contrib- ute to closing the care gap and the growing disparity between the increasing need for care and the available resources to provide it, which will intensify in mature markets in the coming years. We understand the value that professional and family carers bring to societies daily and aim, for example, through our TENA brand campaigns, to increase their visibility and recognition of their needs. • Hygiene and sanitation A cornerstone of our well-being initiatives involves promoting knowledge about good hygiene as the foundation for good health. We actively work toward fostering positive behaviors and routines and elevating hygiene standards while striving to increase access to clean and safe sanitation. Through our Tork brand, we create awareness and increase the knowledge of the importance of hand hygiene. For example, approximately 20,000 people have participated in our award-winning “Tork Virtual Reality Clean Hands” training course since it was launched in 2019. Together with the Global Handwashing Partnership Coalition, we are creating greater awareness of inclusive hygiene in public restrooms. • Infection prevention and control We focus on fostering efficient cleaning routines, raising hygiene standards, improving clean and safe sani- tation access. As part of our broader strategy, we raise awareness, provide training on prevention routines and offer alternative treatment solutions to combat AMR. Essity’s expertise is in improved hand hygiene solu- tions through its Tork brand and infection prevention and management. With the brands Cutimed Sorbact and Leukomed Essity provides wound care dressings, that use an innovative approach to reduce bioburden in wounds without using any chemically active agents, which may help reduce the excessive use of antibiotics. Our #WoundWarriors campaign, launched in 2019, aims to reduce the excessive use of antibiotics in wound care. The campaign targets healthcare professionals and increases awareness of the global impact of AMR and alternative antibiotic-free treatment routines. We further engage in several national and inter- national forums, such as the UN, WHO and national governments, to increase awareness of AMR and drive meaningful action. Community Relations At Essity, we are committed to create value for our consumers, our end-user, our employees, and the local communities we operate in. Our community relations initiatives not only enhance the Essity brand and product brands but also exemplify our company purpose of breaking barriers to well-being. Essity’s steering document for community relations states that the company shall remain politically and religiously neutral. Consequently, Essity does not make payments or product donations to political parties or candidates, or their institutions, agencies, or representatives. In 2024, Essity did not support any organiza- tions or projects with political or religious aims. Contents 95Essity | Annual Report 2024Sustainability statements | S – Social disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures Own workforce Workers in the value chain | Consumers and end-users Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Targets and metrics Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities Essity’s purpose is to break barriers to well-being for the benefit of consumers, patients, caregivers and customers worldwide. Our solutions enable superior hygiene outcomes and experiences at home and away from home by supporting the effectiveness and efficiency of hygiene routines and by preventing, treating and monitoring health conditions. One overall hygiene and health related target is that at least 50% of the company’s innovations are to yield social and/or environmental improvements. Essity tracks the sales from launched innovations. Innovations are assessed against both social and environmental aspects in the innovation’s life cycle. Innovations can be assessed as sustainable if meeting both assessments or only one as long as the other maintain the reference level. During 2024 the social component of sustainable innovations was 54% (48; 56). This met social innova- tion criteria such as hygiene improvements (body and hand hygiene), health (skin health, skin care, curing treatments, mobility) or other relevant benefits (ergonomics, comfort, easy-to-use, odor control). For more information on Essity’s sustainable innovations, see page 80. In 2024, Essity invested approximately SEK 63m (81; 37) in over 500 community relations projects. Most of these projects were related to hygiene and health, areas where our employees also dedicate many working hours, including staff management. Community relations, SEKm 2024 2023 2022 2021 2020 Charitable donations 46.7 53.6 29.3 28.6 39.8 Commercial initiatives 4.1 8.0 2.1 4.9 1.9 Community investments 11.8 19.3 5.8 4.3 7.5 Total 62.6 80.9 37.2 37.8 49.2 of which cash funds 19.5 25.6 14.0 21.8 21.4 of which products 43.1 55.3 23.2 16.0 27.8 Consumers and end-usersS Contents 96Essity | Annual Report 2024Sustainability statements | S – Social disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures Own workforce Workers in the value chain | Consumers and end-users Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Business conductG Business conduct Sustainability matters Value chain Material impact Financial effect Corporate culture Actual positive impact No financial effect Protection of whistleblowers Potential negative impact No financial effect Management of relationships with suppliers (excluding payment practices) Actual positive impact No financial effect Corruption and bribery: Prevention and detection, including training, incidents Potential negative impact No financial effect Governance The role of the administrative, supervisory and management bodies For information on the roles of the Compliance & Ethics department, the Internal Audit function, the Com- pliance Council, the Executive Management Team and the Board of Directors related to business conduct and related impacts, risks and opportunities, see page 50. Impact, risk and opportunity management Description of the processes to identify and assess material impacts, risks and opportunities For information on the process to identify and assess material impacts, risks and opportunities related to business conduct, see page 61. Why business conduct matters Business conduct is an important part of prosperous societies as well as an important part of Essity’s daily business operations. It provides a common ground and general way of conducting business and it pro- motes trust in the company among stakeholders and integrity among employees. It is part of our corporate DNA to conduct our business in a responsible manner. We have a zero-tolerance approach to unethical business behavior in our own operations as well as in the value chains where we exercise control. Business conduct policies and corporate culture Essity actively supports human rights and conducts business in a manner that is socially responsible through principles that are embedded in our identity. Our approach to human rights is based on the UN Guiding Principles on Business and Human Rights. As a signatory to the UN Global Compact, we actively support human rights and conduct our business in a manner that is consistent with its ten principles, as well as with the International Bill of Human Rights, the ILO Core Conventions and the OECD Guidelines for Multinational Enterprises. Human rights due diligence is integrated into our key processes. Whenever we identify a poten- tial or actual negative impact, we take steps to mitigate or remediate any harmful activities. We support and respect internationally recognized human rights wherever we operate. When national laws conflict with international human rights standards, we will adhere to national law, while seeking ways to honor and respect the principles of international human rights. Our human rights commitment is reflected in our Code of Conduct, Human Rights Policy and other company policies. Our Beliefs & Behaviors form the foundation of our corporate culture and guide us in our daily work and in how we behave, act and make decisions. We have four Beliefs: • We are committed to delivering superior results, which means that we are committed to improving every day and that we aim high and ensure that what we do and how we do it, creates value • We care for our customers, consumers, the environment and each other, which means that we show respect and proactively support each other, we act with integrity towards our stakeholders and that sustainability is part of everything we do • We have the courage to take the lead, which means that we have high ambitions, we focus on winning for the future and we are dedicated to developing innovative products, solutions and services that better serve our customers and consumers • We collaborate across teams, functions and businesses, which means that we seek out diverse perspectives and ideas, we trust and challenge each other constructively and we celebrate success as a team Free and fair competition Essity’s business is based on free and fair competition in all the markets in which the company operates. Essity therefore takes seriously any form of anti-competitive conduct in violation of the legislation applicable in the relevant markets. In order to raise awareness in the organization in general, and among relevant cate- gories of employees specifically, Essity has therefore developed guidelines to prevent the risk of regulatory violations of applicable competition law. These guidelines complement the general requirements set out in the Code of Conduct. The guidelines are sent annually to the affected target group with a request for confir- mation that they have been read and understood. Furthermore, in 2023, Essity launched a new e-learning on competition law for employees in Europe and North America. Corresponding training adapted to local con- ditions is also provided to employees in Latin America and Australasia. At the business area level, Essity also holds in-depth training physically for affected target groups. Other measures to prevent the risk of undesir- able behavior include ongoing information to employees regarding current competition law issues, as well as random checks and interviews. Upstream activities Own operations Downstream activities Contents 97Essity | Annual Report 2024Sustainability statements | G – Governance disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures Governance disclosures | Business conduct Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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The German Competition Authority has initiated an investigation into the local market for consumer tissue, including Essity. In 2024, Essity was neither subject to legal proceedings from an authority regarding suspected violation of competition law, nor has it received any administrative fine or other sanction. Reporting breaches Essity encourages an open and honest culture in which all employees and external stakeholders can report suspicions of violations of the Code of Conduct or legislation. Retaliation against individuals who submit reports in good faith is not accepted. Essity offers its employees internal channels, for example line manager, the local HR team or the union/work council representative, to report suspicions of violations. External stake- holders can report suspicions of violations via essity.com. Essity’s Code of Conduct includes a section on how the company’s whistleblower system SpeakUp works and the related training includes information on the whistleblowing system. In addition, information about the whistleblowing system is available at all work- places. To ensure that the information is effective, employee awareness of the whistleblowing system is measured annually in the global employee survey MyVoice. All employees have access to the Essity whistleblower system SpeakUp, which consists of a reporting hotline managed by an external party. The reporting hotline is available 24/7 by phone and online in over 25 languages. Where permitted by law, breaches can be reported anonymously. Training Essity conducts comprehensive business ethics training programs, with training in the Code of Conduct constituting a mandatory part of the onboarding of all new employees. Training is mainly conducted online. At production facilities, where not all employees have immediate online access, Code of Conduct courses are held through classroom instruction. Code of Conduct training 2024 2023 2022 2021 2020 Share of new employees who received training in the Code of Conduct, % 90 88 90 92 92 In 2024, online training based on the UN Guiding Principles on Business and Human Rights was launched and made available to employees and external parties. The aim of the training is to raise awareness of the principles, the UN’s expectations, Essity’s approach to human rights and what we expect from our external partners. Annual anti-corruption training is mandatory for Essity employees who have frequent interactions with external partners. In 2024, 6,467 (6,500) of these employees completed the training. Management of relationships with suppliers Essity has a Global Supplier Standard to ensure responsible business operations and respect for human rights across the company’s supplier base. This standard contains requirements concerning quality, product safety, the environment and chemicals. It also contains a Supplier Code of Conduct that includes Essity’s expectations regarding human rights and employee relations, health and safety and business ethics. Compliance with Essity’s Supplier Code of Conduct is a key factor when choosing suppliers. Essity operates in several markets worldwide and could have a negative impact on a substantial number of individuals. Essity’s strategic suppliers of raw materials and finished products are located all over the world – in Europe, North and South America, Asia and Africa. Consequently, Essity is present in many countries where the risks are high for unethical business practices and violations of human rights. Such breaches could entail serious effects on individuals as well as financial and reputational impacts on the company. We therefore focus on, prioritize and promote trustworthy and responsible business conduct. Risk management process Proper due diligence in the supplier base requires efficient risk management. Risk management is per- formed for both new and existing suppliers. The applied risk-based approach is a method for managing risks by identifying, prioritizing and addressing risks according to their potential impact and probability, consider- ing scope and remediability. On a yearly basis, actions taken, chosen mitigation activities and prioritizations are reviewed considering a changing global context to assess the need to update processes and alter ways of working to better address risks. For this purpose, Essity has a Supplier Risk and Resilience Management Procedure aimed at ensuring supply in accordance with agreed contracts, specifications, sustainability requirements and to reduce costs, avoid regulatory fines and mitigate reputational harm. Another conscious choice we make to further reduce the social and ethical risks within the supply chain is to partner with large multinational corporations based in Europe and the USA with production facilities located in Asia and South America. Suppliers with manufacturing units located in high-risk countries are examined with particular care using standard ethical third-party audits with a focus on health and safety, human rights, employment conditions and corruption. No agreements with strategic suppliers were terminated due to sustainability related non-compliance in 2024. Prevention and detection of corruption and bribery Essity’s compliance program has several compliance activities in place that aim to minimize the risk of Essity taking part in or being associated with unlawful or unethical business practices. Our Anti-Bribery and Cor- ruption Policy sets out our approach to anti-corruption and in addition our Group instruction contains guide- lines for employees on gifts and hospitality. The online anti-bribery and corruption training is available for all employees. It is mandatory for employees within sales, marketing and procurement to undertake the training annually. Essity has systems for due diligence of third parties and procedures for managing corruption risks linked to third parties. Business conductG Contents 98Essity | Annual Report 2024Sustainability statements | G – Governance disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures Governance disclosures | Business conduct Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Business conductG Reports submitted to the whistleblower system and to Essity’s Compliance & Ethics Department by category Category1) 2024 2023 2022 2021 2020 Human Resources (HR) 204 216 83 43 45 Regulatory breach, Fraud and Corruption 41 19 31 14 11 Security Incidents 6 1 – – 2 Operations 24 5 3 4 1 Sustainability 1 – – – – Human Rights – 1 – – – Other 11 7 5 3 2 Total 287 249 122 64 61 1) Essity’s Compliance & Ethics Department places the submitted reports into the relevant category. The category may be changed during the course of an investigation. Of the 287 reported cases in 2024, 278 were closed and 9 are still under investigation. The reported case in the HR category, does not concern degrading treatment. We have not received any reports of discrimination according to the ILO’s definition, Convention no. 111, during the year. No individual was dismissed during the year for breaching the company’s Anti-corruption Policy. No confirmed breaches were financially material. Internal audits conducted of the Code of Conduct 2024 2023 2022 2021 2020 In production Number of audits 6 8 5 5 1 Number of observations 69 118 98 52 7 Average number of observations per audit 11.5 14.8 19.6 10.4 7.0 In sales Number of audits 6 8 6 4 1 Number of observations 46 58 67 28 8 Average number of observations per audit 7.7 7.3 11.2 7.0 8.0 Systematic activities, such as audits and other monitoring processes, are conducted to ensure compliance. For Essity’s production facilities, compliance is ensured through audits using SMETA, which is the most widely used method in the world for social and ethical audits. Essity’s production facilities that have conducted self-assessments in Sedex can share sustainability information with our customers who are Sedex members. Large international customers regularly request third-party SMETA audits to be conducted at Essity’s pro- duction facilities. Compliance with the program for regulatory compliance and the anti-corruption program is ensured through audits conducted by the Internal Audit function. The implementation of the regulatory compliance program and anti-corruption program is reported continuously to Essity’s Compliance Council. Essity’s Compliance & Ethics department receives all submitted reports from the whistleblower system and is responsible for ensuring that necessary action is taken. The Compliance & Ethics department is sepa- rate from management and the Vice President of Compliance & Ethics reports to the Chief Legal Officer and the Board of Directors. Reports are presented regularly to Essity’s Compliance Council, which includes parts of the Executive Management Team. The internal audit function is always given the opportunity to attend the meetings. Essity’s commitment towards regulatory compliance and anti-corruption is stated in our Code of Conduct and is included in the mandatory part of the onboarding of all new employees. Targets and metrics Confirmed incidents of corruption or bribery During 2024, no individual was convicted for any violation of anti-corruption and anti-bribery laws. No fines for violation of anti-corruption and anti-bribery laws were received nor paid. No actions have been taken to address breaches in procedures and standards of anti-corruption and anti-bribery. Reported breaches of the Code of Conduct The table below provides details about the reports submitted to the whistleblower system and to Essity’s Compliance & Ethics department. Business ethics and Code of Conduct Share of new employees who received training in the Code of Conduct Target: 100% Outcome: 90% 2024202320222021 92% 90% 88% 90% Contents 99Essity | Annual Report 2024Sustainability statements | G – Governance disclosures Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures Governance disclosures | Business conduct Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Statutory sustainability report and GRI index Disclosure Page General Business model 55 Environment Policy on environmental issues 51 Risks and risk management on environmental issues 41–46, 68–70, 74, 76–77, 78–79 Targets and outcomes related to environmental issues 26–27, 71–73, 75, 77, 80–82, 96 Social conditions Policy on social issues 51–52 Risks and risk management on social issues 41–46, 83–86, 91–93, 94–95 Targets and outcomes related to social issues 26–27, 80, 87–89, 93, 96, 98 Disclosure Page Respect for human rights Policy for human rights 51–52 Risks and risk management on human rights issues 41–46, 97–98 Targets and outcomes related to human rights issues 27, 98–99 Anti-corruption Policy for work in anti-corruption 51–52 Risks and risk management in anti-corruption 41–46, 98–99 Targets and outcomes related to anti- corruption 27, 98–99 Disclosures according to the EU taxonomy regulation 62–65 Statutory sustainability report The table below, with page references, is provided for clarity on how Essity meets the Swedish Annual Accounts Act 6 chapter 11§. GRI index Essity’s reporting for the January 1, 2024 to December 31, 2024 period is in accordance with the GRI standards. GRI 1: Foundation 2021 was applied. No applicable GRI sector standard was avail able for Essity’s industry. In 2024, the application of the GRI standards – 1, 2 and 3 – resulted in a review of the materiality assessment of the GRI standards. In light of this, certain standards have been added and deleted compared to the Annual Report for 2023. General Standard Disclosures GRI Standard Disclosure Disclosure name Page Omission/Reason/Explanation GRI 2 2021 2-1 Organizational details 123, 133 2-2 Entities included in the organization’s sustainability reporting 48, 166 2-3 Reporting period, frequency and contact point 48–49, 123–124, 191 2-4 Restatements of information 49, 73 2-5 External assurance 103–104, 108, 183–186 2-6 Activities, value chain and other business relationships 5, 29–34, 55–56 Omission: 2-6 c and d Reason: Confidentiality limitations. Explanation: Essity does not report details on relevant business relationships. 2-7 Employees 87–88, 137–138 Omission: 2-7 b Reason/Explanation: Information unavailable/incomplete. 2-8 Workers who are not employees – Omission: 2-8 Reason/Explanation: Information unavailable/incomplete. 2-9 Governance structure and composition 104–106, 110–111 2-10 Nomination and selection of the highest governance body 104–108 2-11 Chair of the highest governance body 110–111 Omission: 2-11 a and b Reason/Explanation: Not applicable. Contents 100Essity | Annual Report 2024Sustainability statements | Statutory sustainability report and GRI index Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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GRI Standard Disclosure Disclosure name Page Omission/Reason/Explanation GRI 2 2021 2-12 Role of the highest governance body in overseeing the management of impacts 104–108 2-13 Delegation of responsibility for managing impacts 50, 61 2-14 Role of the highest governance body in sustainability reporting 50 2-15 Conflicts of interest 104–108 2-16 Communication of critical concerns 26, 54, 99 2-17 Collective knowledge of the highest governance body 106–108 2-18 Evaluation of the performance of the highest governance body 106–108 2-19 Remuneration policies 145–147 2-20 Process to determine remuneration 108 2-21 Annual total compensation ratio 147 Omission: 2-21 b and c Reason/Explanation: Information unavailable/incomplete. 2-22 Statement on sustainable development strategy 8 2-23 Policy commitments 51–52, 97–99 2-24 Embedding policy commitments 51, 92, 97–99 2-25 Processes to remediate negative impacts 85–86, 98–99 2-26 Mechanisms for seeking advice and raising concerns 85, 98–99 2-27 Compliance with laws and regulations 99 2-28 Membership of associations 4, 23, 71, 77, 79, 84, 88, 92, 93, 95 2-29 Approach to stakeholder engagement 57–58, 61 2-30 Collective bargaining agreements 88 Specific disclosures – GRI 200: Economy All GRI topics not listed below have been deemed as not material for Essity. GRI Standard Disclosure Disclosure name Page Omission/Reason/Explanation GRI 3: Material Topics 2021 3-1 Process to determine material topics 61 3-2 List of material topics 59–60 Anti-corruption GRI 3: Material Topics 2021 3-3 Management of material topics 50, 98–99, 104–108 GRI 205: Anti-corruption 2016 205-1 Operations assessed for risks related to corruption 98–99 Anticompetitive Behavior GRI 3: Material Topics 2021 3-3 Management of material topics 50, 104–108 GRI 206: Anticompetitive Behavior 2016 206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices 97–98 Materials GRI 3: Material Topics 2021 3-3 Management of material topics 50, 104–108 GRI 301: Materials 2016 301-1 Materials used by weight or volume 82, 187 301-2 Recycled input materials used 82, 187 Energy GRI 3: Material Topics 2021 3-3 Management of material topics 50, 70–73, 104–108 GRI 302: Energy 2016 302-1 Energy consumption within the organization 48, 72 302-3 Energy intensity 72 Water and Effluents GRI 3: Material Topics 2021 3-3 Management of material topics 50, 74–75, 104–108 GRI 303: Water and Effluents 2018 303-1 Interactions with water as a shared resource 75 303-2 Management of water discharge-related impacts 75 303-3 Water withdrawal 75 Omission: 303-3 c Reason/Explanation: Information unavailable/incomplete. 303-4 Water discharge 75 Omission: 303-4 b and c Reason/Explanation: Information unavailable/incomplete. 303-5 Water consumption 75 General Standard Disclosures, cont. GRI index, cont. Contents 101Essity | Annual Report 2024Sustainability statements | Statutory sustainability report and GRI index Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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GRI Standard Disclosure Disclosure name Page Omission/Reason/Explanation Emissions GRI 3: Material Topics 2021 3-3 Management of material topics 50, 66–73, 104–108 GRI 305: Emissions 2016 305-1 Direct (Scope 1) GHG emissions 73 305-2 Indirect (Scope 2) GHG emissions 73 305-3 Other indirect (Scope 3) GHG emissions 73 305-5 Reduction of GHG emissions 73 305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions 73 Waste GRI 3: Material Topics 2021 3-3 Management of material topics 50, 78–82, 104–108 GRI 306: Waste 2020 306-1 Waste generation and significant waste-related impacts 81–82 306-2 Management of significant waste-related impacts 78–82 306-3 Waste generated 82 306-4 Waste diverted from disposal 82 306-5 Waste directed to disposal 82 Employment GRI 3: Material Topics 2021 3-3 Management of material topics 50, 83–86, 104–108 GRI 401: Employment 2016 401-1 New employee hires and employee turnover 87 Omission: 401-1 Reason/Explanation: Information unavailable/incomplete. Occupational Health and Safety GRI 3: Material Topics 2021 3-3 Management of material topics 50, 83–85, 89, 104–108 GRI 403: Occupational Health and Safety 2018 403-1 Occupational health and safety management system 83–85 403-2 Hazard identification, risk assessment, and incident investigation 83–85 403-4 Worker participation, consultation, and communication on occupational health and safety 83–85 403-6 Promotion of worker health 83–85 403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships 83–85 403-9 Work-related injuries 89 GRI Standard Disclosure Disclosure name Page Omission/Reason/Explanation Training and Education GRI 3: Material Topics 2021 3-3 Management of material topics 50, 83-86, 104–108 GRI 404: Training and Education 2016 404-1 Average hours of training per year and employee 89 Omission: 404-1 Reason/Explanation: Information unavailable/incomplete. 404-3 Percentage of employees receiving regular performance and career development reviews 89 Omission: 404-3 Reason/Explanation: Information unavailable/incomplete. Diversity and Equal Opportunity GRI 3: Material Topics 2021 3-3 Management of material topics 50, 83–86, 104–108 GRI 405: Diver- sity and Equal Opportunity 2016 405-1 Diversity of governance bodies and employees 87–88, 110–113 Omission: 405-1 b Reason/Explanation: Information unavailable/incomplete. 405-2 Ratio of basic salary and remuneration of women to men 90 Omission: 405-2 Reason/Explanation: Information unavailable/incomplete. Non-discrimination GRI 3: Material Topics 2021 3-3 Management of material topics 50, 83–86, 97–99, 104–108 GRI 406: Non-discrimina- tion 2016 406-1 Incidents of discrimination and corrective actions taken 99 Forced labor GRI 3: Material Topics 2021 3-3 Management of material topics 50, 91–93, 104–108 GRI 409: Forced or Compulsory Labor 2016 409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor 92 Public Policy GRI 3: Material Topics 2021 3-3 Management of material topics 50, 95, 104–108 GRI 415: Public Policy 2016 415-1 Political contributions 95 Specific disclosures – GRI 200: Economy, cont. GRI index, cont. Contents 102Essity | Annual Report 2024Sustainability statements | Statutory sustainability report and GRI index Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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Auditor’s report on the limited review and audit of the Sustainability Report of Essity Aktiebolag (publ) This is the translation of the auditor’s report in Swedish. To Essity AB (publ), corp id 556325-5511 Stockholm, 28 February 2025 Ernst & Young AB Erik Sandström Authorized Public Accountant Outi Alestalo Expert member of FAR Introduction We have been engaged by the Board of Essity Aktiebolag (publ) to undertake a combined assurance engagement of the Sustainability Report for Essity Aktiebolag (publ) for the year 2024. The scope of the Sustainability Report has been defined on pages 100–102. Responsibilities of the Board and Executive Management for the Sustainability report The Board of Directors and Executive Management are responsible for the preparation of the Sustainability Report in accordance with the applicable criteria, as defined on page 48, and are part of the Sustainability Reporting Guidelines published by GRI (The Global Reporting Initiative) that are applicable to the Sustainability Report, as well as the accounting and calculation principles that the Company has developed. This responsibility includes the internal control relevant to the preparation of a Sustainability Report that is free from material misstatements, whether due to fraud or error. Responsibilities of the auditor Our responsibility is to express a conclusion on the Sustainability Report based on the assurance procedures we have performed. Our engagement is limited to historical financial information and does therefore not include future oriented information. We conducted our engagement in accordance with ISAE 3000 (revised) Assurance engagements other than audits or reviews of historical financial information. The engagement includes a limited assurance engagement on the com- plete Sustainability Report and audit on fossil fuels and grid supply data on page 72. The objective of an audit is to obtain reasonable assurance that the information is free of material misstatements. A reasonable assurance engage- ment includes examining, on a test basis, evidence supporting the quantitative and qualitative information in the Sustainability Report. A limited assurance engagement consists of making inquiries, primarily of persons responsible for the preparation of the Sustainability Report, and applying analytical and other limited assurance procedures. A limited assurance engagement is different from and substantially less in scope than reasonable assurance conducted in accordance with IAASB’s Standards on Auditing and other generally accepted auditing standards in Sweden. The firm applies ISQM 1 (International Standard on Quality Management 1) and accordingly maintains a compre- hensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. We are independent of Essity Aktiebolag (publ) in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. The conclusion based on our limited assurance procedures does not provide the same level of assurance as the conclusion of our reasonable assurance procedures. Since this engagement is combined, our conclusions regarding reasonable assurance and limited assurance are presented separately below. Our procedures are based on the criteria defined by the Board of Directors and the Executive Management as described above. We consider these criteria suitable for the preparation of the Sustainability Report. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion below. Conclusions Based on the limited assurance procedures we have performed, nothing has come to our attention that causes us to believe that the Sustainability Report is not prepared, in all material respects, in accordance with the criteria defined by the Board of Directors and Executive Management. In our opinion the information in the Sustainability Report which has been subject to our reasonable assurance pro- cedures have, in all material respects, been prepared in accordance with the criteria defined by the Board of Directors and Executive Management. Contents 103Essity | Annual Report 2024Sustainability statements | Auditor’s Combined Assurance Report Introduction The Essity share Strategy Business areas Group Sustainability statements General disclosures Environmental disclosures Social disclosures Governance disclosures Statutory sustainability report and GRI index Auditor’s Combined Assurance Report Corporate governance report Financial statements including notes Other information
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The task of corporate governance is to ensure the company’s commitments to all of its stakeholders: shareholders, customers, suppliers, creditors, society and employees. It must be structured in a way that supports the company’s long-term strategy, market presence and competitiveness. Corporate governance shall be reliable, clear, simple and business-oriented. This Corporate governance report forms part of the Board of Directors’ Report for Essity’s 2024 Annual Report. The report has been reviewed by the company’s auditors. Governance at Essity 1. Shares and shareholders Essity has engaged Euroclear Sweden AB to maintain the compa- ny’s share register. On December 31, 2024, Essity had approximately 100,000 shareholders. The five largest shareholders in terms of voting rights on this date were AB Industrivärden (29.8%), Norges Bank Investment Management (7.4%), AMF Fonder & Pension (6.1%), Swedbank Robur Funds (2.5%) and Blackrock (2.1%). Essity has two listed classes of shares: Class A and Class B shares. Every Class A share represents ten votes while every Class B share represents one vote. There are no other restrictions to voting rights in respect of shares used by shareholders at the general meeting. The two share classes carry the same entitlement to the company’s assets and profits. Furthermore, according to the Articles of Association, owners of Class A shares are entitled to request conversion of their Class A shares to Class B shares. The 2024 Annual General Meeting (AGM) authorized the Board of Directors, for the period until the 2025 AGM, to decide on the repurchase of own Class B shares. On June 17, 2024, Essity’s Board of Directors decided to exercise the authorization and launched a buyback program totaling SEK 3bn. 2. General shareholder meeting The general shareholder meeting is Essity’s highest decision- making body, which all of the company’s shareholders are entitled to attend, to have a matter considered and to vote for all shares held by the shareholder. The company’s Board of Directors and auditor are elected at the AGM. The AGM also resolves on the remuneration of the Board members, determines guidelines for the remuneration of senior executives and approves the Board’s annual remuneration report. 3. Nomination Committee Shareholders appoint members of the Nomination Committee at the AGM, or stipulate how the members shall be appointed. The Nomination Committee represents the company’s shareholders. A majority of the members shall be independent of the company and corporate management. The President and other members of corporate management may not be a member of the Nomination Committee. The main duty of the Nomination Committee is to prepare and present proposals for the AGM’s resolutions with respect to election and remuneration matters. 4. External auditors Essity’s auditor is elected at the AGM and is responsible for reviewing the company’s Annual Report and consolidated financial statements and the Board’s and President’s administration. The auditor conducts a limited review of the company’s sustainability statements and Corporate governance report as well as the company’s half-year report. The auditor submits an audit report from this review. The auditor also submits a statement concerning compliance with the company’s guidelines for remuneration of senior executives. The audit is performed in accordance with the Swedish Companies Act, International Standards on Auditing (ISA) and generally accepted auditing principles in Sweden. 5. Board of Directors The Board of Directors is elected by the shareholders at the AGM and has overall responsibility for the Company’s organization and administration. This responsibility is fulfilled, inter alia, through regular monitoring of the business and by ensuring the appropri- ateness of the organization and the management team, and by issuing guidelines and reporting from the internal audit. The Board approves strategies and targets, and decides on major investments, acquisitions and divestments of operations, among other matters. Furthermore, the Board annually prepares a report on the remuneration that has been paid or is outstanding in accordance with the remuneration guidelines decided by the AGM. The Board of Directors comprises nine members with no deputies. According to the Articles of Association, the Board of Directors is to consist of not less than three and not more than twelve members elected by the AGM. The Board of Directors also includes three employee representatives with deputies, who are appointed by the respective employee organizations under Swedish law. Essity’s Articles of Association contain no provisions regarding appointment or dismissal of Board members or amendments to the Articles. Chairman of the Board The Chairman of the Board is elected by the shareholders at the AGM. The Chairman of the Board leads the work of the Board and Corporate governance Corporate governance, pages 104–113 This section describes applicable rules and regulations for the Group’s corporate governance and the company’s management structure and organization. It presents the Board of Directors’ responsibilities and its work during the year. It also contains a description of Essity’s internal control with regard to financial reporting. Essity applies the Swedish Corporate Governance Code without any deviations (corporategovernanceboard.se). Other information is available on essity.com • Articles of Association • Information from the Nomination Committee ahead of the 2025 Annual General Meeting (composition, proposals and work) • Other information ahead of the 2025 AGM (notice, remunera- tion report and information about routines for notifying atten- dance at the AGM, etc.) Additional information about corporate governance is available on essity.com Risks and risk management, pages 41–46 Essity’s processes to identify and manage risks are part of the Group’s strategy work and are pursued at a local and central level. The risk management sections describe the most significant risks and measures taken to eliminate or limit these risks. Sustainability related risks are described in the sustainability statements. Sustainability, pages 47–99 Essity’s sustainability work is an integral part of the company’s business model. The company’s statutory sustainability state- ments forms part of the Board of Directors’ Report. The sustain- ability work contributes to a sustainable and circular society, reduces risks, strengthens competitiveness, and attracts new employees and investors. 104Essity | Annual Report 2024Contents Corporate governance report | Corporate governance Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Corporate governance Board of Directors and Auditors Executive Management Team Financial statements including notes Other information
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is responsible for ensuring that it is effectively organized and that work is efficiently conducted. This includes continuous monitoring by the Chairman of the company’s operations in close dialogue with the President and ensuring that other Board members receive infor- mation and decision data that will enable high-quality discussion and decisions by the Board. The Chairman leads the assessment of the Board’s and the President’s work. The Chairman also represents the company in ownership matters. 6. Audit Committee The role of the Audit Committee is to monitor the company’s financial reporting and provide recommendations and proposals to ensure the reliability of reporting. The Audit Committee also oversees sustainability reporting. With regard to the financial reporting, the Committee oversees the effectiveness of the company’s internal control, internal audit and risk management. The Audit Committee keeps itself continuously informed about the audit of the Annual Report and consolidated financial statements and about the conclusions of the quality control by the Swedish Inspectorate of Auditors concerning the company’s external auditor. The Committee receives and addresses the supplementary report to the audit report concerning the conducted audit that the auditor submits in accordance with the EU Audit Regulation. The Audit Committee informs the Board of its observations and the results of the audit. The Audit Committee also examines and monitors the impartiality and independence of the auditor. In this respect, particular attention is paid to whether the auditor is providing the company with services other than auditing services. The Committee also assesses the work of the auditor and provides proposals to the company’s Nomination Committee concerning the appointment of auditor for the following mandate period. Members of the Audit Committee are not employed by the company and at least one member has accounting or auditing expertise. 7. Remuneration Committee The Remuneration Committee prepares the Board’s decisions on issues relating to remuneration principles, remuneration and other terms and conditions of employment for the President and is authorized to make decisions in these matters for the company’s other senior executives. The Committee monitors and assesses programs for variable remuneration, the application of the AGM’s resolution on guidelines for remuneration of senior executives and evaluates the applicable remuneration structure and remuneration levels in the Group. The Remuneration Committee also prepares the annual remuneration report. 8. Internal audit The internal audit assists the Group in improving and protecting the organization’s value through a risk-based, independent and objective assurance and consultancy services. The internal audit also reports to the Audit Committee and to the Board in relation to internal audit issues. The audit field encompasses both financial and operational aspects across all of Essity. The internal audit also provides investigations and consultancy services in connection with internal control matters and risk management. 9. President and Executive Management Team Essity’s President and CEO is responsible for the day-to-day administration of the Group and follows the Board’s guidelines and instructions. The President is supported by the Executive Management Team, see pages 112–113, the work of which is led by the President. The Executive Management Team comprises the President, five Group Function Senior Vice Presidents, four Business Unit Presidents and the Presidents of the three global units. Of the 13 members of the Executive Management Team, four are women and the ages of members range between 42 and 64. The Executive Management Team holds regular meetings during the year to discuss and coordinate matters such as the business areas’ economic development and budgets, important projects, strategy issues, sustainability issues and corporate culture. The Executive Management Team also has an advisory role for the President. The working procedures for the Board of Directors and terms of reference issued by the Board of Directors to the President detail, for example, the division of work between the Board and President. In consultation with the Chairman and Secretary of the Board, the President prepares documentation and decision data for the Board’s work. 10. Business units and global units Essity has four business units: • Consumer Goods Americas • Consumer Goods EMEA • Professional Hygiene • Health & Medical Furthermore, Essity has three global units: • Global Marketing & Innovation1) • Global Supply Chain • Global Digital & Business Services These units are described in more detail on page 35. 10. President and CEO 6. Audit Committee 2. General shareholder meeting 1. Shareholders 4. External auditors 3. Nomination Committee 9. Internal audit 10. Executive Management Team 11. Business units and global units 12. Group functions 5. Board of Directors 7. Remuneration Committee 8. Portfolio Development Committee Exercise voting rights 9. President and CEO 6. Audit Committee 2. General shareholder meeting 1. Shareholders 4. External auditors 3. Nomination Committee 8. Internal audit 9. Executive Management Team 10. Business units and global units 11. Group functions 5. Board of Directors 7. Remuneration Committee Proposes Board of Directors and Auditors Exercise voting rights Elects the Board Appoints the President and CEO Audits the Annual Report and the company’s administration 1) Until December 31, 2024, sustainability was part of Global Brand, Innovation & Sustainability, which from January 1, 2025 is called Global Marketing & Innovation. As of January 1, 2025, sustainability is included in Strategy, Business Development & Sustainability, previously Strategy & Business Development. 105Essity | Annual Report 2024Contents Corporate governance report | Corporate governance Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Corporate governance Board of Directors and Auditors Executive Management Team Financial statements including notes Other information
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Rules and regulations Certain internal rules and regulations • Articles of Association • Working procedures of the Board of Directors, including instructions for the Board’s committees. • Terms of reference issued by the Board to the President • Code of Conduct • Policy documents and instructions (in areas such as finance, HR, sustainability, internal control, communication, pension and risk management as well as for specific issues, such as the processing of personal data, insider issues, conflicts of interest, competition law, corruption and diversity). Certain external rules and regulations • The Swedish Companies Act • The Swedish Annual Accounts Act • International Financial Reporting Standards (IFRS) • EU Market Abuse Regulation (MAR) • Nasdaq Stockholm’s rulebook for issuers • Swedish Corporate Governance Code Compliance with stock market regulations Essity complies with rules that apply in Sweden for listed companies and was not sanctioned by Finansinspektionen, the stock exchange’s disciplinary committee or any other authority or self-regulating body for violations of the rules concerning the stock market. Essity has not made any devia- tions from the Swedish Corporate Governance Code. Essity’s business units and global units adhere to the principle of distinct decentralization of responsibility and authority. The busi- ness units and the global units have a delegated responsibility for managing and developing their respective operations through established objectives and strategies, a process that is also centrally coordinated. The business units are responsible for their operating results, capital and cash flow. The business and earnings position is followed up by the entire Executive Management Team on a monthly basis. Each quarter, business review meetings are conducted during which the management of each business unit personally meets with the President and the CFO. These meetings function as a complement to the daily monitoring of the operations. Through working procedures and terms of reference, a number of issues of material significance are placed under the control of the President and the company’s Board of Directors. 11. Group functions Essity has five Group functions: • Communications • Finance • Human Resources • Legal Affairs & Compliance • Strategy, Business Development & Sustainability1) These have a Group-wide responsibility for matters within their respective fields of responsibility, and coordinate with the corre- sponding functions in the respective business area or global unit. Activities during the year Annual General Meeting Essity held its AGM in Stockholm on Thursday, March 21, 2024. The AGM elected the company’s Board of Directors. Furthermore, the Board was authorized, for the period until the 2025 AGM, to decide on the repurchase of own Class B shares. The Meeting also approved the Board’s remuneration report for 2023. The minutes from the 2024 AGM are available on essity.com. Nomination Committee The Nomination Committee of Essity is tasked with making proposals to the AGM in respect of the election of the Chairman of the Meeting, Board of Directors, Chairman of the Board and auditor, remuneration of each Board Member (divided between the Chairman of the Board and other Board Members), remuneration of the auditor and, where applicable, proposals for amendments to the instruction for the Nomination Committee. At the 2020 AGM, the following instructions to the Nomination Committee were adopted to apply until further notice: “The Nomination Committee is to comprise representatives of the four largest shareholders, who express a wish to take part in the Nomination Committee, in terms of voting rights as per the share- holders’ register maintained by the company on the final banking day of August, as well as the Chairman of the Board, who also convenes the first meeting of the Nomination Committee. The member representing the largest shareholder in terms of votes is to be appointed as Chairman of the Nomination Committee. The Chairman of the Board shall not be Chairman of the Nomination Committee. If necessary, due to subsequent ownership changes, the Nomination Committee is entitled to call on one or two additional members from among the next largest shareholders in terms of voting rights. The total number of members shall be not more than seven. In the event that a member steps down from the Nomination Committee before the task is completed and the Nomination Committee decides it would be beneficial for a replace- ment to be appointed, such a replacement is to be appointed by the same shareholder or, if this shareholder is no longer among the largest shareholders in terms of voting rights, by the next largest shareholder in terms of voting rights. Changes to the composition of the Nomination Committee are to be disclosed immediately. The composition of the Nomination Committee is to be announced by Essity no later than six months prior to the AGM. No remuneration is to be paid to the members of the Nomination Committee. Any expenses incurred during the work of the Nomina- tion Committee are to be paid by Essity. The mandate period of the Nomination Committee extends until the composition of the next Nomination Committee is disclosed. The Nomination Committee is to submit proposals relating to the Chairman of the Meeting, the Board of Directors, the Chairman of the Board, Board fees for the Chairman of the Board and each of the other Board members, including remuneration for committee work, the company’s auditor and auditor’s fees and, to the extent deemed necessary, proposals for amendments to this instruction.” In its work, the Nomination Committee is to consider the rules that apply to the independence of Board members, as well as the requirement of diversity and breadth with the endeavor to achieve 1) Until December 31, 2024, sustainability was part of Global Brand, Innovation & Sustainability, which from January 1, 2025 is called Global Marketing & Innovation. As of January 1, 2025, sustainability is included in Strategy, Business Development & Sustainability, previously Strategy & Business Development. 106Essity | Annual Report 2024Contents Corporate governance report | Corporate governance Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Corporate governance Board of Directors and Auditors Executive Management Team Financial statements including notes Other information
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an even gender distribution and that the selection shall be based on expertise and experience relevant to Essity. All shareholders have had an opportunity to submit proposals to the Nomination Committee. The Nomination Committee’s proposal for the 2025 AGM is presented in the notice convening the AGM available on Essity’s website essity.com. The Nomination Committee was convened on seven occasions prior to the 2025 AGM. The Chairman of the Board presented the Board evaluation and provided the Nomination Committee with information regarding Board and committee work during the year. When preparing proposals for the Board for the 2025 AGM, particular attention has been paid to the issues of diversity and an even gender distribution, and the Nomination Committee thus applied rule 4.1 of the Swedish Corporate Governance Code as its diversity policy. When preparing its proposal for the election of auditors, the Nomination Committee also gave consideration to the recom- mendation of the Audit Committee. Board of Directors and composition of the Board of Directors Essity’s Board of Directors comprises nine members elected by the AGM. Ewa Björling, Maria Carell, Annemarie Gardshol, Magnus Groth, Jan Gurander, Torbjörn Lööf, Bert Nordberg, Barbara Milian Thoralfsson and Karl Åberg were elected as Board members at the 2024 AGM. Jan Gurander was elected as the Chairman of the Board. Prior to the AGM, Pär Boman had informed the Nomination Committee that he declined re-election. Of the nine members elected by the AGM, seven are indepen- dent. The independence of each Board member is presented in the table on page 108. Essity complies with the requirements of the Swedish Corporate Governance Code that stipulate that not more than one member elected by the AGM shall be a member of corporate management, that the majority of the members elected by the AGM shall be independent of the company and company management, and that not fewer than two of these shall also be independent of the company’s major shareholders. All of the AGM-elected Board members have experience and a good understanding of the requirements incumbent upon a listed company. Four of the AGM-elected Board members are women, corresponding to approximately 40% of the total number of AGM-elected Board members and the ages of members range between 45 and 68. The employees have appointed Susanna Lind, Sofia Lafqvist and Örjan Svensson as representatives to the Board for the period until and including the 2025 AGM, and their deputies Niklas Engdahl, Martin Ericsson and Andreas Larsson. The AGM-elected Board members have broad international ex pe- rience from different industries, various cultural and geographic areas and wide-reaching expertise and experience of relevance to Essity’s areas of business and products. Accordingly, the Board has – with reference to the company’s business, stage of development and general situation – a suitable composition. In addition, the Board of Directors and its Audit Committee and Remuneration Committee have an even gender distribution. Board activities The Board was convened 10 times during the year. The Board has fixed working procedures that describe in detail which ordinary agenda items are to be addressed at the various Board meetings of the year. Recurring agenda items are finances, the market situation, sustainability, investments and adoption of the financial reports. The Board also establishes and evaluates the company’s overall targets and strategy and decides on significant internal rules. Another key task is to continuously monitor the internal control of the compliance of the company and its employees with relevant internal and external rules, and that the company has well-func- tioning procedures for market disclosures. On a regular basis throughout the year, the Board has also dealt with reports from the Audit and Remuneration Committees and reports on strategy, market, internal audit, internal control and financial operations. The company’s auditor regularly presents a report on its audit work and these issues are discussed by the Board. The Business Unit Presidents present their respective operations and current issues affecting them. In 2024, in addition to customary Board work, the Board of Direc- tors continued to maintain a strong focus on digitalization, strategy, M&A issues, investments, succession issues and sustainability, and closely monitored developments in view of the geopolitical situation in the world. The CEO is evaluated annually by the Board in the absence of the CEO and management. Evaluation of the Board’s work The work of the Board, like that of the President and the Chairman, is evaluated annually using a systematic and structured process. The purpose of this work is to obtain a sound basis for the Board’s own development work and to provide the Nomination Committee with decision data for its nomination work. External expertise was used in the preparation of material and the evaluation took the form of an anonymous questionnaire and interviews as well as group and individual discussions. The evaluation covers areas such as the Board’s methods of work, effectiveness, expertise and the year’s work. The Board was provided with feedback after the results were compiled. The Nomination Committee was informed of the results of the evaluation. Audit Committee The Audit Committee comprises Barbara Milian Thoralfsson (Chairman), Ewa Björling, Jan Gurander and Karl Åberg. In 2024, the Audit Committee held six meetings. In addition, members have also held meetings with internal audit, the auditors, the General Counsel and the CFO. In its monitoring of the financial reporting, the Committee dealt with relevant accounting issues, internal auditors’ reviews, auditing work, risk management, a review of various valuation matters, such as testing of impairment requirements for goodwill, and the preconditions for the year’s pension liability calculations. In addition, the Committee addressed issues relating to sustainability reporting. The Audit Committee also prepared a recommendation to be used by the Nomination Committee when deciding on its proposal to the AGM regarding the election of auditors. Remuneration Committee The Remuneration Committee comprises Jan Gurander (Chairman), Bert Nordberg and Barbara Milian Thoralfsson. The Remuneration Committee held eight meetings in 2024. Activities mainly concerned remuneration and other employment terms and conditions for senior executives, and current remuneration structures and remuneration levels in the Group. In addition, the Committee prepared the Board’s remuneration report relating to remuneration of senior executives. 107Essity | Annual Report 2024Contents Nomination Committee for the 2025 AGM Member Representative of Votes as of August 31, 2024 (%) Helena Stjernholm, Chairman AB Industrivärden 29.6 Anders Hansson AMF and AMF Funds 6.1 Marianne Nilsson Swedbank Robur Funds 2.3 Anders Jonsson Livförsäkringsbolaget Skandia 1.9 Jan Gurander Chairman of the Board Corporate governance report | Corporate governance Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Corporate governance Board of Directors and Auditors Executive Management Team Financial statements including notes Other information
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Internal audit The basis of the work of the internal audit is a risk analysis based on external and internal information carried out in close dialogue with management teams at Essity. The risk evaluation forms the basis of an audit plan, which is presented to the Audit Committee together with the risk analysis. In 2024, 118 audit projects were performed and reported at meetings with the Audit Committee. Work in 2024 involved follow-up of the units’ progress with process-based control, efficiency in internal governance and control, major investments, information security, sustainability and compliance with Essity’s policies. External auditor The 2024 AGM appointed the accounting firm of Ernst & Young AB as the company’s auditor for a mandate period of one year. The accounting firm notified the company that Erik Sandström, Authorized Public Accountant, would be the auditor in charge. Erik Sandström is also the auditor of and has major assignments for Atlas Copco, Epiroc and Ratos. He owns no shares in the company. In accordance with its formal work plan, the Board met with the auditor at three scheduled Board meetings in 2024. The auditor also attended each meeting of the Audit Committee. At these meetings, the auditor presented and received opinions on the focus and scope of the planned audit and delivered verbal audit and review reports. Furthermore, at the Board’s third scheduled autumn meeting, the auditor delivered an in-depth verbal report on the audit for the year. The working procedures specify a number of mandatory issues that must be addressed. These include matters of importance that have been a cause of discussion or concern during the audit, business routines and transactions where differences of opinion may exist regarding the choice of accounting methods. The auditor shall also disclose consultancy work conducted for Essity as well as other dependencies in relation to the company and its management. On each occasion, Board members have had an opportunity to ask the auditors questions. Certain parts of the discussion on the accounts take place without representatives of corporate management being present. Remuneration, Management and Board of Directors Guidelines The 2024 AGM adopted new guidelines for remuneration of senior executives that are based on a total remuneration package com- prising fixed salary, variable compensation and other benefits, and pension, see Note C2 on pages 145–147. Remuneration to the President and other senior executives Remuneration to the President and other senior executives is presented in a separate remuneration report, which is available on essity.com. Furthermore, remuneration of the President and other senior executives is described in Note C2 on pages 145–147. Remuneration to the Board The total remuneration to the AGM-elected Board members amounted to SEK 11,750,000 in accordance with the AGM’s resolution. See Note C3 on page 148 for further information. Internal control and financial reporting The Board’s responsibility for internal governance and control is regulated in the Swedish Companies Act, the Annual Accounts Act and the Swedish Corporate Governance Code. The Annual Accounts Act requires that the company, each year, describes its system for internal control and risk management with respect to financial reporting. The purpose of these requirements is to create an internal framework for governance and control to reduce the risk of error in the financial reporting. Essity’s processes for internal control of financial reporting is based on the model and principles developed by the Committee of Sponsoring Organisa- tions of the Treadway Commission (COSO). Control environment A good control environment requires clarity in relation to decision-making paths, powers and accountability, in addition to a corporate culture characterized by strong values and awareness among employees of their role in maintaining good internal control. The Board of Directors has the overall responsibility for ensuring effective internal control and has, inter alia, adopted Group-wide internal rules for the purpose of establishing a foundation for a good corporate culture and to assure the quality of the financial reporting. In this context, Essity’s Code of Conduct is an important steering document in issues concerning ethics, morality and regulatory compliance, and employees regularly receive information and training regarding the Code. Other sig - ni ficant steering documents for the control environment include the Finance Policy, Internal Control Policy, Communications 1) Board meetings January 1–December 31, 2024. 108Essity | Annual Report 2024Contents Committees Attendance1) Board of Directors Elected Dependence Audit Committee Remuneration Committee Board of Directors (10) Audit Committee (6) Remuneration Committee (8) Ewa Björling 2016 x 10/10 6/6 Pär Boman (until March 21, 2024) 2016 x Chairman 2/2 1/1 3/3 Maria Carell 2023 10/10 Annemarie Gardshol 2016 10/10 Magnus Groth 2016 10/10 6/6 Jan Gurander (Chair. from March 21, 2024) 2023 x Chairman 10/10 6/6 5/5 Torbjörn Lööf 2021 10/10 Bert Nordberg 2016 x 9/10 7/8 Barbara Milian Thoralfsson 2016 Chairman x 10/10 6/6 8/8 Karl Åberg (from March 21, 2024) 2024 x 7/8 5/5 = Dependent in relation to the company’s major shareholder, AB Industrivärden. = President of Essity, dependent in relation to the company and corporate management. 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Policy and Information Security Policy. Essity’s Financial Reporting Manual is particularly important for the Group’s financial reporting procedures as it contains a number of specific instructions and guidelines that are specially designed to ensure the quality of the financial reporting. Important steering documents are published in a separate database that also contains a process for annual updates to the documents. Risk assessment Risks relate to material errors in the financial reporting that may arise, such as incomplete disclosures, valuation issues, the reporting process and correctness. Risks also include loss of assets, unduly favoring a third party and misappropriation. Risks related to the financial reporting are evaluated and monitored by the Board via the Audit Committee, where an annual risk assessment is conducted. The risks that are identified and may result in material errors also form the basis for internal control activities that proactively manage these risks. Clear guidelines for accountability and the division of work also form part of the risk prevention efforts. Furthermore, measures are continuously taken to improve business processes and thus reduce risks. Control activities Significant instructions and guidelines related to financial reporting are prepared and updated regularly by the Group Func- tion Finance and are easily accessible on the Group’s intranet. The Group Function Finance is responsible for ensuring compliance with instructions and guidelines. Process managers at various levels within Essity are responsible for carrying out the necessary control measures with respect to financial reporting. An important role is played by the business unit’s controller organizations, which are responsible for ensuring that financial reporting from each unit is correct and complete, and is conducted within the specified time. In addition, each business unit has a Finance Manager with responsibility for the individual business unit’s financial reporting. The company’s control activities are supported by the budgets that each business unit prepares and updates during the year through continuous forecasts. Essity has a standardized system of control measures involving processes that are significant to the company’s financial reporting. These measures include compa- ny-wide controls related to the Code of Conduct, process controls and IT controls. Self-assessments are carried out based on a selection of critical controls for the respective operations in order to assess the effectiveness of the internal control and governance. Information and communication Financial reporting to the Board The Board’s working procedures stipulate which reports and information of a financial nature are to be submitted to the Board at each scheduled meeting. The President, together with the Chairman, ensures that the Board receives the reports required to enable the Board to continuously assess the company’s and Group’s financial position. Detailed instructions specifically outline the types of reports that the Board is to receive at each meeting. Internal reporting Ahead of each interim report, the company’s finance department prepares detailed instructions regarding deadlines, changes to accounting principles and other circumstances of significance for reporting to ensure the quality of the financial statements. Furthermore, the company has a process and technical system support to limit the risk of price-sensitive information being leaked in conjunction with the submission of financial information ahead of the issue of interim reports. Accounting and reporting for the majority of units is carried out by Essity’s Shared Service Center, which ensures efficient and uniform reporting. External financial reporting The quality of external financial reporting is ensured via a number of actions and procedures. The President is responsible for ensuring that all information communicated, such as press releases with financial content, presentation material for meetings with the media, owners and financial institutions, is correct and of a high quality. The responsibilities of the company’s auditors include reviewing accounting issues that are critical for the financial reporting and reporting their observations to the Audit Committee and the Board of Directors. In addition to the audit of the annual accounts, a review of the half-year report and of the company’s administration and internal control is carried out. Monitoring activities Essity’s Board of Directors, through the Audit Committee, as well as the corporate management continuously assesses the effec- tiveness of the processes applied by the company with respect to the internal control of the financial reporting. Of particular importance to this assessment are the reports submitted by the internal audit and feedback from the company’s external auditor. The company has a structured process within the scope of its day-to-day operations for monitoring significant observations from internal control or internal audit. Such observations and the status of measures taken to address these are regularly reported to corporate management and to the Audit Committee. The results of the self-assessment in control activities are compiled in a list of activities that require action. The internal control and governance department lead these monitoring activities. To ensure the quality of the self-assessment, internal control conducts its own testing of control activities and reports the results to the units, the internal control and governance department, corporate management and the Audit Committee. The external auditor also carries out testing of internal control and governance within the scope of its audit. The results are shared with corporate management, the internal control and governance department and the Audit Committee. Contact details to the Nomination Committee and the Board of Directors can be found on page 191. 109Essity | Annual Report 2024Contents Corporate governance report | Corporate governance Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Corporate governance Board of Directors and Auditors Executive Management Team Financial statements including notes Other information
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Board of Directors and Auditors Elected by the Annual General Meeting Maria Carell (1973) MSc Econ Member of the Board in RG Holdco, USA. President and CEO of RG Holdco, USA. Previous senior positions in Exeltis, Meda, Q-MED, Actavis, Novartis and Jansen-Cilag. Elected: 2023 Independent of the company, corporate management and Essity’s major shareholders. Own shareholdings and those of related persons: 0 Annemarie Gardshol (1967) MSc Eng Member of the Board of Svenska Cellulosa Aktiebolaget SCA. President and CEO of PostNord AB. Former member of the Boards of Etac AB, Bygghemma AB, Ortivus AB and Semcon AB. Former President of PostNord Sverige, PostNord Strålfors Group AB and various management positions in Gambro AB and McKinsey & Company. Elected: 2016 Independent of the company, corporate management and Essity’s major shareholders. Own shareholdings and those of related persons, Class B shares: 5,500 Ewa Björling (1961) Med. Dr. Sci. and Associate Professor from Karolinska Institutet. Chairman of the Board of Xolaris AB and PAR Foundation. Member of the Board of Nynas AB. Former member of the Board of Svenska Cellulosa Aktiebolaget SCA, Biogaia AB, Bioarctic AB and Min Doktor AB. Former Chairman of SPBI (Svenska Petroleum och Biodrivmedelsinstitutet). Minister for Trade 2007–2014, and Minister for Nordic Cooperation 2010–2014. Former researcher at Karolinska Institutet. Elected: 2016 Independent of the company, corporate management and Essity’s major shareholders. Own shareholdings and those of related persons: 0 Torbjörn Lööf (1965) Technician Chairman of the Board of AB Electrolux, member of the Board of Husqvarna AB, Mercer International and Aktiebolaget Blåkläder. Former President of Inter IKEA Group 2016–2020, Inter IKEA Systems 2013–2016 and IKEA of Sweden 2007–2013. Previously held various senior positions within IKEA since 1999. Former Chairman of the Board in a number of IKEA Group companies 2013–2020 and member of the Board of Inter IKEA Holding 2016–2020. Elected: 2021 Independent of the company, corporate management and Essity’s major shareholders. Own shareholdings and those of related persons, Class B shares: 8,500 Jan Gurander (1961) MSc Econ Chairman of the Board since 2024. Member of the Board of Skanska AB. Former deputy CEO and CFO of AB Volvo. Previous senior positions in Volvo Cars, MAN, Scania, Investor and Swedbank Robur. Elected: 2023 Independent of the company, corporate management and Essity’s major shareholders. Own shareholdings and those of related persons, Class B shares: 11,400 Information regarding own shareholdings and those of related persons pertains to the situation on December 31, 2024. Bert Nordberg (1956) Engineer Deputy Chairman of the Board of SAAB Aktiebolag and Chairman of the Board of Axis Communications AB. Previously held various management positions in Digital Equipment Corp. and Ericsson, President of Sony Mobile Communications AB 2009–2012. Former Chairman of the Boards of Sony Mobile Communications, Vestas Wind Systems A/S and TDC Group A/S and member of the Boards of Svenska Cellulosa Aktiebolaget SCA, BlackBerry Ltd, Skistar AB and AB Electrolux. Elected: 2016 Independent of the company, corporate management and Essity’s major shareholders. Own shareholdings and those of related persons, Class B shares: 36,800 Barbara Milian Thoralfsson (1959) MBA, BA Chairman of the Board of Exclusive Networks SA. Member of the Board of Hilti AG and Svenska Cellulosa Aktiebolaget SCA. Member of the Advisory Board Sparebank 1 Markets. Former President of NetCom ASA 2001–2005 and President of Midelfart & Co AS 1995–2000. Former member of the Boards of Cable & Wireless Plc, AB Electrolux, G4S Plc, Orkla ASA, Tandberg ASA and Telenor ASA. Elected: 2016 Independent of the company, corporate management and Essity’s major shareholders. Own shareholdings and those of related persons, Class B shares: 3,000 Karl Åberg (1979) MSc Econ Deputy CEO, head of investments and of the finance function at AB Industrivärden. Member of the Board of Ericsson and Alleima. Previous senior positions in the financial sector, including as partner at Zeres Capital and as partner at CapMan. He has also previously worked at Handelsbanken Capital Markets. Elected: 2024 Independent of the company and corporate management. Own shareholdings and those of related persons, Class B shares: 1,500 110Essity | Annual Report 2024Contents Corporate governance report | Board of Directors and Auditors Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Corporate governance Board of Directors and Auditors Executive Management Team Financial statements including notes Other information
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Board members and deputies appointed by trade unions Deputies Niklas Engdahl (1980) Employed at Essity Hygiene and Health AB, Lilla Edet. Member of the Council for Negotiation and Cooperation (PTK). Appointed: 2017 Own shareholdings and those of related persons: 0 Martin Ericsson (1968) Employed at Essity Hygiene and Health AB, Falkenberg. Member of the Council for Negotiation and Cooperation (PTK). Appointed: 2017 Own shareholdings and those of related persons, Class A shares: 200 Class B shares: 200 Andreas Larsson (1989) Employed at Essity Hygiene and Health AB, Gothenburg. Member of the Council for Negotiation and Cooperation (PTK). Appointed: 2018 Own shareholdings and those of related persons, Class B shares: 2,120 Auditors Ernst & Young AB Senior Auditor: Erik Sandström, Authorized Public Accountant. Own shareholdings and those of related persons: 0 Secretary to the Board Mikael Schmidt (1960) Master of Laws Chief Group Function Legal Affairs & Compliance, General Counsel. Employed since: 1992 Own shareholdings and those of related persons, Class B shares: 37,000 Susanna Lind (1966) Operator at Essity Hygiene and Health AB, Falkenberg. Member of the Swedish Trade Union Confederation (LO). Appointed: 2019 Own shareholdings and those of related persons, Class B shares: 120 Sofia Lafqvist (1978) Research Engineer at Essity Hygiene and Health AB, Gothenburg. Member of the Council for Negotiation and Cooperation (PTK). Appointed: 2024 Own shareholdings and those of related persons: 0 Örjan Svensson (1963) Senior Industrial Safety Representative at Essity Hygiene and Health AB, Edet Bruk, Lilla Edet. Member of the Swedish Trade Union Confederation (LO). Former member of the Board of Svenska Cellulosa Aktiebolaget SCA 2005–2017. Appointed: 2017 Own shareholdings and those of related persons, Class B shares: 112 Information regarding own shareholdings and those of related persons pertains to the situation on December 31, 2024. Magnus Groth (1963) MBA and MSc ME President and CEO of Essity. Member of the Board of Wallenius Wilhelmsen. Former President and CEO of SCA 2015–2017, former President of SCA Consumer Goods Europe 2011–2015. President of Studsvik AB (publ) 2006–2011 and SVP of Vattenfall 2001–2005. Former member of the Board of Acando AB and Svenska Cellulosa Aktiebolaget SCA. Elected: 2016 Independent of Essity’s major shareholders. Own shareholdings and those of related persons, Class B shares: 103,000 111Essity | Annual Report 2024Contents Corporate governance report | Board of Directors and Auditors Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Corporate governance Board of Directors and Auditors Executive Management Team Financial statements including notes Other information
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Donato Giorgio (1973) President, Global Supply Chain MSc Eng Employed since: 2009 Own shareholdings and those of related persons, Class B shares: 12,233 Ulrika Kolsrud (1970) President, Health & Medical MSc Eng Employed since: 1995 Own shareholdings and those of related persons, Class B shares: 16,382 Carl-Magnus Månsson (1966) Chief Digital & Information Officer Global Digital & Business Services Studies in Applied Physics Employed since: 2023 Own shareholdings and those of related persons, Class B shares: 1,607 Andres Gomez (1977) President, Consumer Goods Americas MBA and MSc Eng Employed since: 2021 Own shareholdings and those of related persons, Class B shares: 4,623 Executive Management Team Magnus Groth (1963) President and CEO MBA and MSc ME Employed since: 2011 Own shareholdings and those of related persons, Class B shares: 103,000 Jessica Alm (1977) Chief Communication Officer Group Function Communications MSc. in Geological and Earth Sciences/Geosciences and Journalism Employed since: 2023 Own shareholdings and those of related persons, Class B shares: 729 Pablo Fuentes (1973) President, Professional Hygiene MSc, MBA Employed since: 2006 Own shareholdings and those of related persons, Class B shares: 22,869 Fredrik Rystedt (1963) CFO and Executive Vice President, Head of Group Function Finance MSc Econ Employed since: 2014 Own shareholdings and those of related persons, Class B shares: 43,500 Information regarding own shareholdings and those of related persons pertains to the situation on December 31, 2024. 112Essity | Annual Report 2024Contents Corporate governance report | Executive Management Team Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Corporate governance Board of Directors and Auditors Executive Management Team Financial statements including notes Other information
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Tuomas Yrjölä (1978) President, Global Marketing & Innovation1) MSc Econ Employed since: 2014 Own shareholdings and those of related persons, Class B shares: 15,217 Volker Zöller (1967) President, Consumer Goods EMEA BSc BA Employed since: 1994 Own shareholdings and those of related persons, Class B shares: 19,569 Mikael Schmidt (1960) Chief Group Function Legal Affairs & Compliance, General Counsel and Secretary to the Board Master of Laws Employed since: 1992 Own shareholdings and those of related persons, Class B shares: 37,000 Sahil Tesfu (1982) Chief Strategy Officer Group Function Strategy & Sustainability1) MBA Business Administration Employed since: 2021 Own shareholdings and those of related persons, Class B shares: 3,791 Anna Sävinger Åslund (1969) Chief HR Officer Group Function Human Resources BSc Human Resources Employed since: 2001 Own shareholdings and those of related persons, Class B shares: 11,955 Information regarding own shareholdings and those of related persons pertains to the situation on December 31, 2024. 1) Until December 31, 2024, sustainability was part of Global Brand, Innovation & Sustainability, which from January 1, 2025 is called Global Marketing & Innovation. As of January 1, 2025, sustainability is included in Strategy, Business Development & Sustainability, previously Strategy & Business Development. 113Essity | Annual Report 2024Contents Corporate governance report | Executive Management Team Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Corporate governance Board of Directors and Auditors Executive Management Team Financial statements including notes Other information
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Group notes A. Accounting principles and use of alternative performance measures B. Sales and earnings C. Employees D. Operating assets and liabilities E. Capital structure and financing page 123–128 page 129–144 page 145–150 page 151–155 page 156–165 A1. General accounting principles, new accounting rules and basis of preparation 123 B1. Net sales – Revenues from contracts with customers 129 C1. Personnel costs 145 D1. Goodwill and intangible assets 151 E1. Financial instruments by category and measurement level 156 A2. Use of alternative performance mea- sures 124 B2. Segment reporting 130 C2. Remuneration of senior executives 145 D2. Property, plant and equipment 153 E2. Financial assets, cash and cash equivalents 157 B3. Operating expenses 141 C3. Fees to board members in the Parent company during the year 148 D3. Inventories 154 E3. Trade receivables 158 B4. Auditing expenses 142 C4. Remuneration after completion of employment 148 D4. Other current receivables 154 E4. Financial liabilities 159 B5. Income taxes 142 D5. Other liabilities 154 E5. Liquidity risk 160 D6. Other provisions 155 E6. Derivatives and hedge accounting 160 D7. Contracts with supply chain finance 155 E7. Financial income and expenses 164 E8. Equity 164 Financial statements, Group Consolidated income statement1) IS ��������������������������������������������������������������������������116 Consolidated statement of comprehensive income CI ���������������������������������������������116 Consolidated balance sheet1) BS ���������������������������������������������������������������������������������117 Consolidated statement of change in equity EQ ��������������������������������������������������������118 Consolidated cash flow statement1) CF ����������������������������������������������������������������������120 Change in liabilities attributable to financing activities ��������������������������������������������� 121 Correlation between consolidated cash flow statement and operating cash flow statement, supplementary disclosure ���������������������������������������121 Consolidated operating cash flow statement, supplementary disclosure1) OCF �������122 Auditor’s report ��������������������������������������������������������������������������������������������������������183 Financial statements including notes Amounts that are reconcilable to the balance sheet, equity, income statement, statement of comprehensive income, cash flow statement and the operating cash flow statement are marked with the following symbols: BS Balance sheet EQ Equity IS Income statement CI Statement of comprehensive income CF Cash flow statement OCF Operating cash flow statement 1) In previous years, some financial statements were translated into EUR for the reader’s convenience. As of 2024, all of Essity’s financial statements will only be presented in the Group’s currency, SEK. Contents 114Essity | Annual Report 2024Financial statements including notes | Contents Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Group notes, cont. F. Group structure G. Other page 166–170 page 171–173 F1. Group companies 166 G1. Leases 171 F2. Investments in associates and joint ventures 167 G2. Contingent liabilities and pledged assets 172 F3. Joint operations 169 G3. Transactions with related parties 172 F4. Acquisitions and divestments of Group companies and other operations 169 G4. Assets held for sale and discontinued operations 173 G5. Events after the balance sheet date 173 Financial statements, Parent company .... 174 Parent company income statement Parent company statement of comprehensive income Parent company cash flow statement Parent company balance sheet Parent company statement of change in equity Parent company notes PC. Notes to the Parent company’s financial statements page 176–182 PC1. Basis for preparation of Parent company’s annual accounts 176 PC2. Operating profit 176 PC3. Personnel and Board costs 176 PC4. Income taxes 177 PC5. Intangible assets 178 PC6. Property, plant and equipment 178 PC7. Participations in subsidiaries 178 PC8. Receivables from and liabilities to Group companies 179 PC9. Other current receivables 179 PC10. Financial instruments 180 PC11. Other current liabilities 181 PC12. Share capital 181 PC13. Contingent liabilities and pledged assets 181 PC14. Adoption of the annual accounts 181 PC15. Events after the balance sheet date 181 PC16. Proposed disposition of earnings 182 Contents 115Essity | Annual Report 2024Financial statements including notes | Contents Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Consolidated income statement IS SEKm Note 2024 2023 2022 Net sales B1, B2 145,546 147,147 131,320 Cost of goods sold B3 –97,929 –102,627 –97,395 Items affecting comparability (IAC) – cost of goods sold B2, B3 –483 –1,349 –1,899 Gross profit 47,134 43,171 32,026 Gross profit excl. IAC 47,617 44,520 33,925 Sales, general and administration B3 –27,351 –25,661 –21,916 Items affecting comparability (IAC) – sales, general and administration B2, B3 –386 –942 –272 Share of results of associates and joint ventures B3 78 39 38 Operating profit before amortization of acquisition-related intangible assets (EBITA) 19,475 16,607 9,876 Operating profit/loss before amortization of acquisition-related intangible assets (EBITA), excl. IAC 20,344 18,898 12,047 Amortization of acquisition-related intangible assets B3 –1,110 –1,109 –1,111 Items affecting comparability (IAC) – acquisition-related intangible assets B2, B3 –70 –350 –274 Operating profit 18,295 15,148 8,491 Operating profit excl. IAC 19,234 17,789 10,936 Financial income E7 593 412 141 Financial expenses E7 –2,524 –2,768 –1,461 Profit before tax 16,364 12,792 7,171 Profit before tax excl. IAC 17,303 15,433 9,616 Income taxes B5 –4,331 –3,275 –2,006 Profit for the period, continuing operations 12,033 9,517 5,165 Profit for the period excl. IAC, continuing operations 12,778 11,634 7,410 Profit for the period, discontinued operations G4 9,015 279 899 Profit for the period, total operations 21,048 9,796 6,064 Earnings attributable to: Owners of the Parent company Profit for the period, continuing operations 11,969 9,440 5,110 Profit for the period, discontinued operations G4 8,919 114 457 Profit for the period, total operations 20,888 9,554 5,567 Non-controlling interests Profit for the period, continuing operations 64 77 55 Profit for the period, discontinued operations G4 96 165 442 Profit for the period, total operations 160 242 497 Earnings per share – owners of the Parent company Earnings per share before and after dilution effects, continuing operations, SEK 17.09 13.44 7.28 Earnings per share before and after dilution effects, discontinued operations, SEK 12.74 0.16 0.65 Earnings per share before and after dilution effects, total operations, SEK 29.83 13.60 7.93 Average number of shares before and after dilution, million 700.3 702.3 702.3 Dividend – owners of the Parent company Paid dividend per share, SEK 7.75 7.25 7.00 Dividend paid, SEKm 5,443 5,092 4,916 Proposed dividend per share, SEK 8.25 7.75 7.25 Proposed dividend, SEKm 5,7331) 5,443 5,092 1) Based on the number of shares outstanding on December 31, 2024. The final dividend amount will be based on the number of shares outstanding on the record date of March 31, 2025. Consolidated statement of comprehensive income CI SEKm 2024 2023 2022 Profit for the period, continuing operations 12,033 9,517 5,165 Profit for the period, discontinued operations IS 9,015 279 899 Profit for the period, total operations IS 21,048 9,796 6,064 Other comprehensive income for the period Items that will not be reclassified to the income statement Actuarial gains/losses on defined benefit pension plans 92 1,334 2,298 Fair value through other comprehensive income 4 5 –16 Income tax attributable to components in other comprehensive income –36 –161 –659 Total, continuing operations 60 1,178 1,623 Total, discontinued operations – – 1 Total operations 60 1,178 1,624 Items that have been or may be reclassified subsequently to the income statement Cash flow hedges: Result from remeasurement of derivatives recognized in equity –3 –4,360 3,110 Transferred to profit or loss for the period 1,740 1,681 –5,252 Translation differences in foreign operations 4,623 –270 8,216 Gains/losses from hedges of net investments in foreign operations –1,488 572 –1,435 Income tax attributable to components in other comprehensive income –146 612 856 Total, continuing operations 4,726 –1,765 5,495 Total, discontinued operations –557 –932 125 Total operations 4,169 –2,697 5,620 Other comprehensive income for the period, net of tax 4,229 –1,519 7,244 Of which, continuing operations 4,786 –587 7,118 Of which, discontinued operations –557 –932 126 Total comprehensive income for the period 25,277 8,277 13,308 Of which, continuing operations 16,819 8,930 12,283 Of which, discontinued operations 8,458 –653 1,025 Total comprehensive income attributable to: Owners of the Parent company 24,719 8,617 12,338 Non-controlling interests 558 –340 970 Contents 116Essity | Annual Report 2024Financial statements including notes | Financial statements, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Consolidated balance sheet BS SEKm Note 2024 2023 2022 ASSETS Non-current assets Goodwill D1 41,137 39,337 44,786 Intangible assets D1 20,734 21,345 25,346 Property, plant and equipment D2 48,304 44,909 57,471 Right-of-use assets G1 4,088 3,934 5,427 Investments in associates and joint ventures F3 351 294 291 Shares and participations 8 6 6 Surplus in funded pension plans C4 2,475 3,072 1,965 Non-current financial assets E2 128 117 123 Deferred tax assets B5 2,326 2,343 2,545 Other non-current assets 824 745 1,620 Total non-current assets 120,375 116,102 139,580 Current assets Inventories D3 18,914 17,546 28,888 Trade receivables E3 23,538 21,920 25,990 Current tax assets B5 1,673 1,289 1,152 Other current receivables D4 4,480 3,391 5,761 Current financial assets E2 5,342 5,259 4,941 Cash and cash equivalents E2 10,962 5,159 4,288 Total current assets 64,909 54,564 71,020 Total assets, continuing operations 185,284 170,666 210,600 Assets held for sale G4 – 32,327 – Total assets, total operations 185,284 202,993 210,600 SEKm Note 2024 2023 2022 EQUITY AND LIABILITIES Equity EQ Owners of the Parent company Share capital 2,350 2,350 2,350 Reserves E8 13,224 9,421 11,477 Retained earnings including profit/loss for the year 72,740 59,075 53,519 Equity attributable to owners of the Parent company 88,314 70,846 67,346 Non-controlling interests 427 8,559 9,218 Total equity 88,741 79,405 76,564 Non-current liabilities Non-current financial liabilities E4 40,674 45,336 58,242 Provisions for pensions C4 2,578 2,587 2,671 Deferred tax liabilities B5 6,978 6,935 8,718 Other non-current provisions D6 507 466 491 Other non-current liabilities D5 516 1,073 1,196 Total non-current liabilities 51,253 56,397 71,318 Current liabilities Current financial liabilities E4 6,424 15,648 13,273 Trade payables D7 17,098 15,119 25,644 Current tax liabilities B5 1,442 2,165 1,589 Current provisions D6 1,377 1,408 1,217 Other current liabilities D5 18,949 19,143 20,995 Total current liabilities 45,290 53,483 62,718 Total liabilities, continuing operations 96,543 109,880 134,036 Liabilities directly attributable to assets held for sale G4 – 13,708 – Total equity and liabilities, total operations 185,284 202,993 210,600 Contingent liabilities and pledged assets, see Note G2 on page 172. Contents 117Essity | Annual Report 2024Financial statements including notes | Financial statements, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Consolidated statement of change in equity EQ SEKm Share capital TE8:1 Reserves Retained earnings Equity attribut- able to owners of the Parent company Non- controlling interests Total equity Value, January 1, 2024 2,350 9,421 59,075 70,846 8,559 79,405 Profit for the period IS 20,888 20,888 160 21,048 Other comprehensive income for the period Items that will not be reclassified to the income statement Actuarial gains/losses on defined benefit pension plans1) 92 92 0 92 Fair value through other comprehensive income 4 4 4 Income tax attributable to components in other comprehensive income TE8:2 –3 –33 –36 0 –36 Other comprehensive income that will not be reclassified to the income statement 1 59 60 0 60 Items that have been or may be reclassified subsequently to the income statement Cash flow hedges: Result from remeasurement of derivatives recognized in equity –3 –3 –3 Transferred to profit or loss for the period 1,740 1,740 1,740 Translation differences in foreign operations 3,790 3,790 398 4,188 Gains/losses from hedges of net investments in foreign operations –1,641 –1,641 –1,641 Income tax attributable to components in other comprehensive income TE8:2 –115 –115 –115 Other comprehensive income that has been or may be reclassified subsequently to the income statement 3,771 3,771 398 4,169 Other comprehensive income for the period, net of tax 3,772 59 3,831 398 4,229 Total comprehensive income for the period CI 3,772 20,947 24,719 558 25,277 Transactions with owners Acquisition of non-controlling interests –8 –8 –43 –51 Divestment of non-controlling interests –8,624 –8,624 Transferred to cost of hedged investments 31 31 31 Revaluation effect upon acquisition of non- controlling interests 393 393 393 Dividend, SEK 7.75 per share2) CF OCF –5,443 –5,443 –23 –5,466 Buyback of own shares –2,224 –2,224 –2,224 Value, December 31 BS 2,350 13,224 72,740 88,314 427 88,741 1) Including payroll tax. 2) Dividend of SEK 7.75 per share pertains to owners of the Parent company. For the 2024 fiscal year, the Board of Directors has decided to propose a divided of SEK 8.25 per share to the Annual General Meeting. SEKm Share capital TE8:1 Reserves Retained earnings Equity attribut- able to owners of the Parent company Non- controlling interests Total equity Value, January 1, 2023 2,350 11,477 53,519 67,346 9,218 76,564 Profit for the period IS 9,554 9,554 242 9,796 Other comprehensive income for the period Items that will not be reclassified to the income statement Actuarial gains/losses on defined benefit pension plans1) 1,333 1,333 1 1,334 Fair value through other comprehensive income 5 5 5 Income tax attributable to components in other comprehensive income TE8:2 1 –162 –161 – –161 Other comprehensive income that will not be reclassified to the income statement 6 1,171 1,177 1 1,178 Items that have been or may be reclassified subsequently to the income statement Cash flow hedges: Result from remeasurement of derivatives recognized in equity –4,360 –4,360 –4,360 Transferred to profit or loss for the period 1,681 1,681 1,681 Translation differences in foreign operations –737 –737 –583 –1,320 Gains/losses from hedges of net investments in foreign operations 720 720 720 Income tax attributable to components in other comprehensive income TE8:2 582 582 582 Other comprehensive income that has been or may be reclassified subsequently to the income statement –2,114 –2,114 –583 –2,697 Other comprehensive income for the period, net of tax –2,108 1,171 –937 –582 –1,519 Total comprehensive income for the period CI –2,108 10,725 8,617 –340 8,277 Transactions with owners Acquisition of non-controlling interests 1 1 –0 1 Transferred to cost of hedged investments 52 52 52 Revaluation effect upon acquisition of non- controlling interests –78 –78 –78 Dividend, SEK 7.25 per share2) CF OCF –5,092 –5,092 –319 –5,411 Value, December 31 BS 2,350 9,421 59,075 70,846 8,559 79,405 1) Including payroll tax. 2) Dividend of SEK 7.25 per share pertains to owners of the Parent company. Contents 118Essity | Annual Report 2024Financial statements including notes | Financial statements, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Consolidated statement of change in equity, cont. EQ SEKm Share capital TE8:1 Reserves Retained earnings Equity attribut- able to owners of the Parent company Non- controlling interests Total equity Value, January 1, 2022 2,350 6,309 51,215 59,874 8,633 68,507 Profit for the period IS 5,567 5,567 497 6,064 Other comprehensive income for the period Items that will not be reclassified to the income statement Actuarial gains/losses on defined benefit pension plans1) 2,296 2,296 3 2,299 Fair value through other comprehensive income –16 –16 –16 Income tax attributable to components in other comprehensive income TE8:2 3 –662 –659 –659 Other comprehensive income that will not be reclassified to the income statement –13 1,634 1,621 3 1,624 Items that have been or may be reclassified subsequently to the income statement Cash flow hedges: Result from remeasurement of derivatives recognized in equity 3,110 3,110 3,110 Transferred to profit or loss for the period –5,252 –5,252 –5,252 Translation differences in foreign operations 7,841 7,841 470 8,311 Gains/losses from hedges of net investments in foreign operations –1,397 –1,397 –1,397 Income tax attributable to components in other comprehensive income TE8:2 848 848 848 Other comprehensive income that has been or may be reclassified subsequently to the income statement 5,150 – 5,150 470 5,620 Other comprehensive income for the period, net of tax 5,137 1,634 6,771 473 7,244 Total comprehensive income for the period CI 5,137 7,201 12,338 970 13,308 Transactions with owners Private placement to non-controlling interests 17 17 16 33 Acquisition of non-controlling interests –10 –10 –3 –13 Transferred to cost of hedged investments 31 31 31 Revaluation effect upon acquisition of non- controlling interests 12 12 12 Dividend, SEK 7.00 per share2) CF OCF –4,916 –4,916 –398 –5,314 Value, December 31 BS 2,350 11,477 53,519 67,346 9,218 76,564 1) Including payroll tax. 2) Dividend of SEK 7.00 per share pertains to owners of the Parent company. For further information, see Note E8 Equity on page 165. Contents 119Essity | Annual Report 2024Financial statements including notes | Financial statements, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Consolidated cash flow statement CF SEKm Note 2024 2023 2022 Operating activities Operating profit IS 18,295 15,148 8,491 Adjustments for non-cash items T:1 8,019 9,459 9,669 Operating profit excluding non-cash items 26,314 24,607 18,160 Interest paid –2,473 –2,421 –717 Interest received 569 410 139 Other financial items –235 –320 –670 Capitalized expenditure to fulfill contracts with customers –467 –466 –474 Change in liabilities relating to restructuring programs, etc. –271 –203 –41 Paid tax B5 –5,860 –3,615 –2,175 Cash flow from operating activities before changes in working capital 17,577 17,992 14,222 Cash flow from changes in working capital Change in Inventories –946 2,505 –4,750 Operating receivables –2,218 –19 –3,492 Operating liabilities 2,756 –1,401 4,018 Cash flow from operating activities, continuing operations 17,169 19,077 9,998 Cash flow from operating activities, discontinued operations –368 2,491 2,876 Cash flow from operating activities, total operations 16,801 21,568 12,874 Investing activities Acquisitions of Group companies and other operations F4 –17 –178 –4,797 Divestments of Group companies and other operations F4 17,980 1,234 – Investments in intangible assets and property, plant and equipment T:2 –7,396 –6,850 –5,416 Paid interest capitalized in intangible assets and property, plant and equipment T:2 –39 –40 –14 Sale of property, plant and equipment 103 71 68 Purchase and sale of financial assets with short maturities –1,137 –48 –2,827 Cash flow from investing activities, continuing operations 9,494 –5,811 –12,986 Cash flow from investing activities, discontinued operations –87 –1,298 –1,514 Cash flow from investing activities, total operations 9,407 –7,109 –14,500 SEKm Note 2024 2023 2022 Financing activities Acquisition of non-controlling interests F4 –51 – –14 Proceeds from borrowings1) 1,397 21,163 32,546 Repayment of borrowings1) –15,004 –26,509 –18,539 Payment of lease liabilities1) G1 –1,069 –998 –896 Change in borrowings with short maturities, etc.1) 93 –1,226 –5,055 Dividend EQ –5,443 –5,092 –4,916 Dividend to non-controlling interests –23 –2 –21 Buyback of own shares –2,224 – – Cash flow from financing activities, continuing operations –22,324 –12,664 3,105 Cash flow from financing activities, discontinued operations –12 1,113 –1,297 Cash flow from financing activities, total operations –22,336 –11,551 1,808 Cash flow for the period, continuing operations 4,339 602 117 Cash flow for the period, discontinued operations –467 2,306 65 Cash flow for the period, total operations 3,872 2,908 182 Cash and cash equivalents, January 1 6,927 4,288 3,904 Translation differences in cash and cash equivalents 163 –269 202 Cash and cash equivalents, total operations, December 31 E2 10,962 6,927 4,288 1) From 2024, change in borrowings with short maturities, etc. and payment of lease liabilities are presented separately in the cash flow statement. The comparative figures have been restated. For information about the Group’s liquidity reserve, refer to page 46. Adjustments for non-cash items T:1 SEKm 2024 2023 2022 Depreciation/amortization and impairment of non-current assets 7,505 7,998 9,012 Depreciation of capitalized selling expenses 474 490 465 Gain/loss on sale of assets –30 36 32 Gain/loss on divestment and liquidation – 524 2 Non-cash items relating to restructuring programs 185 393 84 Other –115 18 74 Total 8,019 9,459 9,669 Investments in intangible assets and property, plant and equipment including paid capitalized interest T:2 SEKm 2024 2023 2022 Measures to raise the capacity level of operations (Strategic capital expenditures) –2,156 –1,563 –1,462 Measures to uphold capacity level (Current capital expenditures) –5,279 –5,327 –3,968 Total –7,435 –6,890 –5,430 Contents 120Essity | Annual Report 2024Financial statements including notes | Financial statements, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Change in liabilities attributable to financing activities SEKm Note Value at January 1 Liabilities directly attributable to assets held for sale Cash flow, net Acquisitions/ divestments Translation differences Actuarial gains/losses Other changes Value at December 31 2024 Non-current and current financial liabilities E4 60,984 – –16,509 – 1,691 – 932 1) 47,098 Provisions for pensions including surplus in funded pension plans C4 –485 – 861 – –181 –92 – 103 Assets for hedging financial liabilities included in cash flow from financing activities E2 –1,755 – 1,065 – – – – –690 Total liabilities including surplus in funded pension plans attributable to financing activities 58,744 – –14,583 – 1,510 –92 932 46,511 2023 Non-current and current financial liabilities E4 71,514 –4,372 –7,450 –11 179 – 1,124 1) 60,984 Provisions for pensions including surplus in funded pension plans C4 706 –9 144 – 8 –1,334 – –485 Assets for hedging financial liabilities included in cash flow from financing activities E2 –1,491 – –264 – – – – –1,755 Total liabilities including surplus in funded pension plans attributable to financing activities 70,729 –4,381 –7,570 –11 187 –1,334 1,124 58,744 2022 Non-current and current financial liabilities E4 58,189 – 7,434 144 4,565 – 1,1821) 71,514 Provisions for pensions including surplus in funded pension plans C4 2,710 – 339 – –45 –2,298 – 706 Assets for hedging financial liabilities included in cash flow from financing activities E2 –817 – –674 – – – – –1,491 Total liabilities including surplus in funded pension plans attributable to financing activities 60,082 – 7,099 144 4,520 –2,298 1,182 70,729 1) Other changes relate to change in accrued interest SEK –208m (25; 73), change in liability related to financial leases in accordance with IFRS 16 of SEK 1,141m (1,099; 1,109), of which SEK 560m (608; 547) relates to operating assets and SEK 581m (491; 562) to non-operating assets, and other items SEK –1m (–; –). SEKm 2024 2023 2022 Cash flow from operating activities, continuing operations Cash flow from operating activities 17,169 19,077 9,998 Adjustments Investments in non-current assets, net –7,332 –6,819 –5,362 Accrued interest 208 –25 –71 Investments in operating assets through leases –560 –608 –476 Other – – –1 Cash flow from current operations according to consolidated operating cash flow statement 9,485 11,625 4,088 Cash flow from investing activities, continuing operations Cash flow from investing activities 9,494 –5,811 –12,986 Adjustments Investments in non-current assets, net 7,332 6,819 5,362 Purchase and sale of financial assets with short maturities 1,137 48 2,827 Acquisition of non-controlling interests –51 – –14 Net debt in acquired and divested companies 5,928 11 –144 Cash flow from acquisitions and divestments according to consolidated operating cash flow statement 23,840 1,067 –4,955 Correlation between consolidated cash flow statement and operating cash flow statement, supplementary disclosure SEKm 2024 2023 2022 Cash flow for the period, continuing operations Cash flow for the period 4,339 602 117 Adjustments Proceeds from borrowings1) –1,397 –21,163 –32,546 Repayment of borrowings1) 15,004 26,509 18,539 Payment of lease liabilities1) 1,069 998 896 Change in borrowings with short maturities, etc.1) –93 1,226 5,055 Purchase and sale of financial assets with short maturities 1,137 48 2,827 Net debt in acquired and divested operations 5,928 11 –144 Investments in operating assets through leases –560 –608 –476 Accrued interest 208 –25 –71 Other – – –1 Net cash flow according to consolidated operating cash flow statement 25,635 7,598 –5,804 1) From 2024, change in borrowings with short maturities, etc. and payment of lease liabilities are presented separately in the cash flow statement. The comparative figures have been restated. Contents 121Essity | Annual Report 2024Financial statements including notes | Financial statements, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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SEKm Note 2024 2023 2022 Net sales IS 145,546 147,147 131,320 Operating expenses –119,107 –122,162 –113,542 Operating surplus 26,439 24,985 17,778 Adjustment for non-cash items 559 584 623 Operating cash surplus 26,998 25,569 18,401 Change in Inventories –946 2,505 –4,750 Operating receivables –2,218 –19 –3,492 Operating liabilities 2,756 –1,401 4,018 Change in working capital –408 1,085 –4,224 Investments in non-current assets, net –7,332 –6,819 –5,362 Restructuring costs, etc. –1,456 –1,542 –659 Investments in operating assets through leases –560 –608 –476 Operating cash flow 17,242 17,685 7,680 Financial items E7 –1,931 –2,356 –1,320 Income taxes paid B5 –5,860 –3,615 –2,175 Other 34 –89 –97 Cash flow from current operations 9,485 11,625 4,088 Acquisitions of Group companies and other operations F4 –68 –182 –4,955 Divestments of Group companies and other operations F4 23,908 1,249 – Cash flow from acquisitions and divestments 23,840 1,067 –4,955 Cash flow before transactions with shareholders 33,325 12,692 –867 Dividend EQ –5,443 –5,092 –4,916 Dividend to non-controlling interests –23 –2 –21 Buyback of own shares –2,224 – – Net cash flow, continuing operations 25,635 7,598 –5,804 Net cash flow, discontinued operations –467 866 952 Net cash flow, total operations 25,168 8,464 –4,852 Net debt SEKm 2024 2023 2022 Net debt, January 1 –53,703 –62,869 –55,433 Net cash flow 25,168 8,464 –4,852 Remeasurements to equity 96 1,339 2,281 Investments in non-operating assets through leases –581 –491 –562 Translation differences –1,749 –146 –4,303 Net debt, total operations, December 31 –30,769 –53,703 –62,869 Consolidated operating cash flow statement, supplementary disclosure OCF Contents 122Essity | Annual Report 2024Financial statements including notes | Financial statements, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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A. Accounting principles, basis of preparation and use of alternative performance measures A1. General accounting principles, new accounting rules and basis of preparation Reading instructions General accounting principles AP and new accounting rules are presented below. Other accounting principles consid- ered material by Essity are presented in conjunction with the respective note. Key assessments and assumptions KAA are presented under the respective note, see use of assessments below. Amounts that are reconcilable to the balance sheet, equity, income statement, statement of comprehensive income, cash flow statement and the operating cash flow statement are marked with the following symbols: BS Balance sheet EQ Equity IS Income statement CI Statement of comprehensive income CF Cash flow statement OCF Operating cash flow statement Tx:x Reference to table in note Company information Essity Aktiebolag (publ), Corp. Reg. No. 556325-5511, is a public limited liability company whose shares are listed and traded on Nasdaq Stockholm (for more information, see “The Essity share” on page 9). The registered office of the company is Stockholm, Sweden, with the postal address of PO Box 200, SE-101 23 Stock- holm, Sweden. The Group mainly conducts operations in the fields of hygiene and health. Basis for preparation Essity’s financial statements are prepared in accordance with the Annual Accounts Act, IFRS® accounting standards as adopted within the EU, and the Swedish Corporate Reporting Board, Recommendation RFR 1, Supplementary Account- ing Rules for Groups. The accounts for both the Group and the Parent company relate to the fiscal year that ended on December 31, 2024. The annual report was approved for publishing by the Board of Directors and the President on February 20, 2025. The financial statements are subject to approval by the Annual General Meeting of shareholders on March 27, 2025. New or amended accounting standards 2024 A number of amended accounting standards published by the International Accounting Standards Board (IASB®) are effective from January 1, 2024 following endorsement by the EU. Essity has applied these amendments, of which none have had a significant impact on the Group’s financial statements and are therefore not commented on. With respect to the application of the OECD Pillar 2 rules, see Note B5 Income taxes, page 142. New or amended accounting standards after 2024 A number of new and amended accounting standards have not yet come into effect and have not been applied in advance in the preparation of the Group’s and the Parent company’s financial statements. The Group intends to comply with these new and amended standards when they come into force. Most of these new standards and amendments to standards published by the IASB are not expected to have any material impact on the Group’s or the Parent company’s financial statements. On April 9, 2024, a new standard IFRS 18 Presentation and Disclosures in Financial Statements was published and will be effective from January 1, 2027 if adopted by the EU. Essity is of the opinion that this standard will impact Essity’s finan- cial statements and is currently analyzing the details in the standard and its consequences. Use of assessments and assumptions KAA The preparation of financial statements in accordance with IFRS accounting standards and generally accepted Swedish accounting principles requires assessments and assumptions to be made that affect recognized assets, liabilities, income and expenses as well as other information disclosed. These assumptions and estimates are often based on historical experience, but also on other factors, including expectations of future events. Actual results may differ from these assumptions and assessments. Where appropriate, climate-related issues are considered. This assessment includes a wide range of possible impacts due to both physical and transition risks. Even though Essity believes that its business model and products will remain profitable after the transition to a low-carbon economy, climate-related issues increase the uncertainty in estimates and assumptions underlying several items in the financial statements. Items where climate-related matters mainly increase uncertainty in assumptions and estimates are deemed to relate to the useful lives of machinery and equipment and impairment testing of goodwill. Although climate-related risks do not currently have any material impact on the financial statements, Essity is closely monitoring relevant changes and developments, such as new climate-related legislation. In Essity’s opinion, the areas that are impacted the most by assumptions and estimates are: • Determination of transaction price in accounting of revenues, B1 Net sales – Revenues from contracts with customers, page 129 • Taxes, B5 Income taxes, page 142 • Pensions, C4 Remuneration after completion of employment, page 148 • Goodwill, D1 Intangible assets, page 151 • Provisions, D6 Other provisions, page 155 • Provision for doubtful receivables, E3 Trade receivables, page 158 • Leases, G1 Leases, page 171 Essity’s assessments and assumptions are presented in the respective notes. Principles of consolidation The Group’s consolidated financial statements include the Parent company and its Group companies, which comprise subsidiaries, joint ventures, associates and joint operations. Group companies are consolidated from the date the Group exercises control or influence over the company according to the definitions and accounting principles provided in Notes F1 Group companies on page 166, F2 Investments in associates and joint ventures on page 167 and F3 Joint operations on page 169. Divested Group companies are included in the consolidated accounts until the date the Group ceases to control or exercise influence over the companies. For additional information about accounting principles regarding acquisitions of Group companies and respective non-controlling interests, see Note F4 Acquisitions and divestments of Group companies and other operations on page 169. Intra-Group transactions have been eliminated. Translation of foreign currency Functional currency and translation of foreign Group companies to the presentation currency The functional currency of each Essity Group company is determined on the basis of the primary economic environ- ment in which the respective company is active which, with a few exceptions, is the country in which the individual company operates. Essity’s Parent company has Swedish kronor as its functional currency. The consolidated financial statements of Group companies are translated to the Group’s presentation currency, which is also Swedish kronor. Assets and liabilities are translated at the closing rate, while income and expenses are translated at the average rate for the respective period. Translation differences during the period on the Group’s net assets are recognized in other com- prehensive income in the translation reserve as a component of equity. Exchange rate effects arising from financial instruments used to hedge foreign Group companies’ net assets are recognized in the same manner in other compre- hensive income in the translation reserve as a component of equity. On divestment, the accumulated translation differ- ences on the foreign Group company and accumulated exchange rate effects on the financial instrument used to currency hedge the net assets in the company are recognized as part of the gain or loss on disposal. Goodwill and fair value adjustments arising in connection with the acquisition of a foreign Group company are translated from their functional currency to the presentation currency in the same way as the net assets in the company are translated. Transactions and balance sheet items in foreign currency Transactions in foreign currency are translated to a functional currency using the rate prevailing on the transaction date. At the balance sheet date, monetary assets and liabilities in foreign currency are translated at the closing rate and any exchange rate effects are recognized in profit or loss. In cases where the exchange rate effect is related to the opera- tions, the effect is recognized net in operating profit. Exchange rate effects pertaining to borrowing and financial invest- ments are recognized as other financial items. If hedge accounting has been applied, for example, for cash flow hedges or hedging of net investments, the exchange rate effect is recognized in equity under other comprehensive income. If a financial instrument has been classified as financial assets measured at fair value through comprehensive income, the portion of the value change pertaining to currency is recognized in profit or loss, any other unrealized changes are recognized in equity under other comprehensive income. Contents 123Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Government grants Government grants are measured at fair value when there is reasonable assurance that the grants will be received and Essity will comply with the conditions attached to them. Government grants related to acquisition of assets are recog- nized in the balance sheet by the grant reducing the carrying amount of the asset. Government grants received as com- pensation for costs are accrued and recognized in profit or loss during the same period as the costs incurred. If the government grant or assistance is neither related to the acquisition of assets nor to compensation for costs, the grant is recognized as other income. Principles for consolidation of Group companies in hyperinflationary economies Essity conducts operations through wholly owned Group companies in Argentina and Turkey, defined as hyperinflation- ary economies (accumulated inflation rate of about 100% or more over a three-year period) according to the Interna- tional Monetary Fund (IMF). For these Group companies, income statements, cash flow statements and non-monetary items in balance sheets are adjusted in local currency to the price level applying at the end of the period in the consoli- dated financial statements using the consumer price index. Gains or losses on monetary net assets are recognized in the income statement in financial items. Income statements and cash flow statements are translated into Swedish kronor at the closing rate on consolidation. The effect from the date hyperinflationary accounting is applied is recog- nized in the translation reserve in equity. The relevant consumer price index used to make adjustments for inflation is sourced from Trading Economics. Reporting of discontinued operations On March 21, 2024, Essity completed the sale of its 51.59% shareholding in the Asian hygiene company Vinda Interna- tional Holdings Limited (Vinda). For additional information on the divestment, see Note G4 Assets held for sale and dis- continued operations on page 173 and Note F4 Acquisitions and divestments of Group companies and other operations on page 169. As of the fourth quarter of 2023, Essity classifies the financial reporting of Vinda as discontinued opera- tions, meaning that assets and liabilities related to Vinda are presented on separate lines in the balance sheet and that the profit or loss after tax for the period from discontinued operations is reported on a separate line in the income state- ment. The income statement and cash flow statement are adjusted for comparative periods as though the discontinued operation had already been classified as discontinued operations at the beginning of the comparative period. A1. General accounting principles, new accounting rules and basis of preparation, cont. A2. Use of alternative performance measures Guidelines concerning alternative performance measures for companies with securities listed on a regulated market in the EU have been issued by the ESMA (European Securities and Markets Authority). These guidelines are to be applied to alternative performance measures not supported under IFRS accounting standards. The Annual Report refers to a number of performance measures not defined in IFRS accounting standards. These performance measures are used to assist investors and company management to analyze the company’s operations and objectives. These non-IFRS measures may differ from similar terms used by other companies, descriptions of the various measures used as a complement to the financial information required according to IFRS accounting standards are presented below. The tables that present return, cash flow and performance measures refer to continuing opera- tions. For capital measures, it is indicated in the tables whether the figures relate to continuing operations or total operations. From 2024, Essity has resolved to replace the term “Adjusted” when referring to non-IFRS performance measures and instead use “excl. IAC”. See the table below. New term for non-IFRS performance measure (used as of 2024) Previous term for non-IFRS performance measure Return on capital employed, ROCE excl. IAC Adjusted return on capital employed, ROCE Return on equity, ROE excl. IAC Adjusted return on equity Debt payment capacity excl. IAC Adjusted debt payment capacity Net debt/EBITDA excl. IAC Net debt/Adjusted EBITDA Gross profit excl. IAC Adjusted gross profit Operating profit before depreciation and amortization of property, plant and equipment and intangible assets (EBITDA) excl. IAC Adjusted operating profit before depreciation, amortization and impairment of property, plant and equipment and intangible assets (EBITDA) SEKm 2024 2023 2022 RETURN ON CAPITAL EMPLOYED, ROCE1) EBITA 19,475 16,607 9,876 Items affecting comparability (IAC) 869 2,291 2,171 EBITA excl. IAC 20,344 18,898 12,047 Average capital employed 115,346 115,105 110,727 Return on capital employed, ROCE % 16.9 14.4 8.9 Return on capital employed, ROCE excl. IAC % 17.6 16.4 10.9 1) Continuing operations. SEKm 2024 2023 2022 RETURN ON EQUITY, ROE1) Profit for the period 21,048 9,796 6,064 Items affecting comparability (IAC), net after tax 745 2,117 2,245 Other earnings attributable to divestment of Vinda –8,798 46 18 Profit for the period excl. IAC 12,995 11,959 8,327 Average equity 83,604 78,169 74,711 Return on equity, ROE % 25.2 12.5 8.1 Return on equity, ROE excl. IAC % 15.5 15.3 11.1 1) Total operations. New term for non-IFRS performance measure (used as of 2024) Previous term for non-IFRS performance measure Operating profit before amortization of acquisition-related intangible assets (EBITA) excl. IAC Adjusted operating profit before amortization of acquisition- related intangible assets (EBITA) Gross margin excl. IAC Adjusted gross margin EBITA margin excl. IAC Adjusted EBITA margin Operating margin excl. IAC Adjusted operating margin Operating profit excl. IAC Adjusted operating profit Profit before tax excl. IAC Adjusted profit before tax Taxes excl. IAC Adjusted tax Profit for the period excl. IAC Adjusted profit for the period Earnings per share excl. IAC Adjusted earnings per share Cash earnings excl. IAC Adjusted cash earnings Calculation of performance measures not included in IFRS framework Return measures Return is a financial term that describes how much the value of an asset changes from an earlier point in time Non-IFRS performance measure Description Reason for use of the measure Return on capital employed, ROCE Return on capital employed is calculated as 12-months rolling operating profit before amortization of acquisition-related intangible assets (EBITA) as a percentage of average capital employed (see page 125). The corresponding key figure for a single quarter is calculated as EBITA for the quarter multiplied by four as a percentage of average capital employed. A central ratio for measuring return on capital tied up in operations. Return on capital employed, ROCE excl. IAC Return on capital employed excl. IAC is calculated as 12-months rolling Operating profit before amortization of acquisition-related intangible assets (EBITA), excl. IAC, as a percentage of average capital employed (see page 125). The corresponding key figure for a single quarter is calculated as EBITA excl. IAC for the quarter, multiplied by four as a percentage of average capital employed. A central ratio for measuring return on capital tied up in operations, excluding items affecting comparability (IAC). Contents 124Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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A2. Use of alternative performance measures, cont. Capital measures Shows how capital is utilized and the company’s financial strength Non-IFRS performance measure Description Reason for use of the measure Return on equity, ROE For the Group, return on equity is calculated as profit for the period as a percentage of an average of equity during the five most recent quarters. The corresponding key figure for a single quarter is calculated as profit for the quarter multiplied by four as a percentage of average equity for the two most recent quarters. Shows, from a shareholder perspective, the return that is generated on the owners’ capital that is invested in the company. Return on equity, ROE excl. IAC For the Group, return on equity excl. IAC is calculated as profit for the period excluding items affecting comparability (IAC) as a percentage of an average of equity during the five most recent quarters. The corresponding key figure for a single quarter is calculated as profit for the quarter excl. IAC multiplied by four as a percentage of average equity for the two most recent quarters. Shows, from a shareholder perspective, the return excluding items affecting comparability (IAC) that is generated on the owners’ capital that is invested in the company. Equity The equity reported in the consolidated balance sheet consists of taxed equity increased by the equity portion of the Group’s untaxed reserves and non-controlling interests. The deferred tax liability in untaxed reserves has been calculated on the basis of the corporate tax rate decided to apply when the reserves are expected to be realized. Equity is the difference between the Group’s assets and liabilities, which corresponds to the Group’s equity contributed by owners and the Group’s accumulated results including the share attributable to non-controlling interests. Equity per share Equity in relation to the average number of shares outstanding excluding shares owned by Essity Aktiebolag (publ). A measure of the amount of equity per outstanding share which is used for measuring the share against the share price. Equity/assets ratio Equity expressed as a percentage of total assets. A traditional measure for showing financial risk, expressing the percentage of total assets that is financed by the owners. Capital employed The Group’s and business areas’ capital employed is calculated as the balance sheet’s total assets, excluding assets held for sale, interest-bearing assets and pension assets, less total liabilities, excluding liabilities directly attributable to assets held for sale, interest-bearing liabilities and pension liabilities. This measure shows the amount of total capital that is used in the operations and is thus one of the components for measuring the return from operations. Average capital employed Average capital employed, on a year basis, is calculated, as an average of the five most recent quarters’ closing balance. For a quarter, an average of two most recent quarters is used. A financial measure used for calculating Return on capital employed, ROCE and Return on capital employed, ROCE excl. IAC. SEKm 2024 2023 2022 CAPITAL EMPLOYED Total assets 185,284 202,993 210,600 Total assets in discontinued operations – –32,327 – Financial assets –18,907 –13,607 –11,317 Non-current, non-interest-bearing liabilities –8,001 –8,474 –10,405 Current, non-interest-bearing liabilities –38,866 –37,835 –49,445 Capital employed 119,510 110,750 139,433 Capital employed, continuing operations 119,510 110,750 114,793 Capital measures, cont. Shows how capital is utilized and the company’s financial strength Non-IFRS performance measure Description Reason for use of the measure Capital turnover Net sales for the year divided by average capital employed. Shows in a clear manner how effectively capital is employed. Together with sales growth and the operating margin, the capital turnover ratio is a key measure for monitoring value creation. Working capital The Group’s and business areas’ working capital is calculated as current operating receivables less current operating liabilities. This measure shows the amount of working capital tied up in the operations and can be put in relation to net sales to understand how effectively used the tied-up working capital is. SEKm 2024 2023 2022 WORKING CAPITAL Inventories 18,914 17,546 28,888 Trade receivables 23,538 21,920 25,990 Other current receivables 4,480 3,391 5,761 Trade payables –17,098 –15,119 –25,644 Other current liabilities –18,949 –19,143 –20,995 Other –139 176 33 Working capital, total operations 10,746 8,771 14,033 Working capital, continuing operations 10,746 8,771 12,493 Capital measures, cont. Shows how capital is utilized and the company’s financial strength Non-IFRS performance measure Description Reason for use of the measure Net debt The sum of consolidated interest-bearing liabilities, including pension liabilities and accrued interest less pension assets, cash and cash equivalents and interest-bearing current and non-current receivables. Net debt is the most relevant measure for showing the company’s total debt financing. Contents 125Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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SEKm 2024 2023 2022 NET DEBT Surplus in funded pension plans 2,475 3,072 1,965 Non-current financial assets 128 117 123 Current financial assets 5,342 5,259 4,941 Cash and cash equivalents 10,962 5,159 4,288 Financial assets 18,907 13,607 11,317 Non-current financial liabilities 40,674 45,336 58,242 Provisions for pensions 2,578 2,587 2,671 Current financial liabilities 6,424 15,648 13,273 Financial liabilities 49,676 63,571 74,186 Net debt, continuing operations 30,769 49,964 59,315 Net debt, discontinued operations – 3,739 3,554 Net debt, total operations 30,769 53,703 62,869 Capital measures, cont. Shows how capital is utilized and the company’s financial strength Non-IFRS performance measure Description Reason for use of the measure Debt/equity ratio Debt/equity ratio is expressed as net debt in relation to equity. Shows financial risk and is the most useful measure for management to monitor the level of the company’s indebtedness. Debt payment capacity, % Debt payment capacity is expressed as 12-months rolling cash earnings (see page 128) in relation to closing net debt. A financial measure that shows the company’s capacity to repay its debt. Debt payment capacity, excl. IAC, % Debt payment capacity, excl. IAC is expressed as 12-months rolling cash earnings excl. IAC (see page 128) in relation to closing net debt. A financial measure that shows the company’s capacity to repay its debt, adjusted for the impact of items affecting comparability (IAC). Net debt/EBITDA Calculated as the closing balance of net debt in relation to 12-months rolling EBITDA. A financial measure that shows the company’s capacity to repay its debt. Net debt/EBITDA excl. IAC Calculated as the closing balance of net debt in relation to 12-months rolling EBITDA, excl. IAC. A financial measure that shows the company’s capacity to repay its debt, adjusted for the impact of items affecting comparability (IAC). Interest coverage ratio Calculated on a net basis, according to which operating profit is divided by financial items. Helps to show the company’s capacity to cover its interest expenses. Performance measures Various types of performance measures and margin measures expressed as a percentage of sales Non-IFRS performance measure Description Reason for use of the measure Organic sales growth Underlying change in sales growth compared with the previous period attributable to changed volume, price or product mix and excluding changes attributable to exchange rate effects, acquisitions and divestments. This measure is of major importance for management in its monitoring of underlying organic sales growth driven by changes in volume, price or product mix for comparable units between different periods. SEKm 2024 2023 2022 SALES GROWTH Organic sales growth 319 7,608 17,521 Acquisitions – 1,248 2,444 Divestments –1,325 –1,692 –109 Exchange rate effects1) –595 8,664 9,997 Recognized change –1,601 15,828 29,853 ORGANIC SALES GROWTH Previous period sales 147,147 131,320 101,466 Organic sales growth 319 7,608 17,521 Total organic sales for the period 147,466 138,928 118,987 Organic sales growth % 0.2 5.8 17.3 1) Consists solely of currency translation effects. Performance measures, cont. Various types of performance measures and margin measures expressed as a percentage of sales Non-IFRS performance measure Description Reason for use of the measure Gross profit excl. IAC Net sales minus cost of goods sold excluding items affecting comparability (IAC). Gross profit shows the company’s earnings before the effects of sales, general and administration. Gross profit excl. IAC excludes items affecting comparability (IAC). Operating profit before depreciation/amortization on property, plant and equipment and intangible assets (EBITDA) Calculated as operating profit before depre- ciation, amortization and impairment of prop- erty, plant and equipment and intangible assets. This measure is a complement to operating profit, as it shows the cash earnings from operations. Operating profit before depreciation/amortization on property, plant and equipment and intangible assets (EBITDA) excl. IAC Calculated as operating profit before depreciation, amortization and impairment of property, plant and equipment and intangible assets excluding items affecting comparability (IAC). This measure is a complement to operating profit, as it shows the cash earnings from operations adjusted for the impact of items affecting comparability (IAC). Operating profit before amortization of acquisition- related intangible assets (EBITA) Calculated as operating profit after depreciation, amortization and impairment of property, plant and equipment and intangible assets but before amortization and impairment of acquisition-related intangible assets. The measure is a good complement to enable earnings comparisons with other companies, regardless of whether business activities are based on acquisitions or organic growth. Operating profit before amortization of acquisition- related intangible assets (EBITA) excl. IAC Calculated as operating profit after depreciation, amortization and impairment of property, plant and equipment and intangible assets but before amortization and impairment of acquisition-related intangible assets, excluding items affecting comparability (IAC). The measure is a good complement to enable earnings comparisons with other companies, regardless of whether business activities are based on acquisitions or organic growth, and is also adjusted for the impact of items affecting comparability (IAC). A2. Use of alternative performance measures, cont. Contents 126Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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A2. Use of alternative performance measures, cont. SEKm 2024 2023 2022 Operating profit before depreciation/amortization on property, plant and equipment and intangible assets (EBITDA) Operating profit 18,295 15,148 8,491 Amortization of acquisition-related intangible assets 1,110 1,109 1,111 Depreciation/amortization 5,028 5,000 4,779 Depreciation right-of-use assets 1,089 1,061 948 Impairment 56 65 41 Items affecting comparability (IAC) – net of impairment 152 413 1,858 Items affecting comparability (IAC) – impairment of acquisition-related intangible assets 70 350 274 EBITDA 25,800 23,146 17,502 Items affecting comparability (IAC) excluding depreciation/amortization and impairment 717 1,878 313 Operating profit before depreciation/amortization on property, plant and equipment and intangible assets (EBITDA) excl. IAC 26,517 25,024 17,815 SEKm 2024 2023 2022 Operating profit before amortization of acquisition-related intangible assets (EBITA) excl. IAC Operating profit 18,295 15,148 8,491 Amortization of acquisition-related intangible assets 1,110 1,109 1,111 Items affecting comparability (IAC) – impairment of acquisition-related intangible assets 70 350 274 Operating profit before amortization of acquisition-related intangible assets (EBITA) 19,475 16,607 9,876 EBITA margin % 13.4 11.3 7.5 Items affecting comparability (IAC) – cost of goods sold 483 1,349 1,899 Items affecting comparability (IAC) – sales, general and administration 386 942 272 Operating profit before amortization of acquisition-related intangible assets (EBITA) excl. IAC 20,344 18,898 12,047 EBITA margin excl. IAC % 14.0 12.8 9.2 Performance measures, cont. Various types of performance measures and margin measures expressed as a percentage of sales Non-IFRS performance measure Description Reason for use of the measure Items affecting comparability (IAC) Under items affecting comparability (IAC), Essity includes costs in connection with acquisitions, restructuring, impairment and other specific events that are relevant when comparing earnings for one period with those of another. The item other specific events is specified in Note B3 Operating expenses on page 141. Separate reporting of items affecting comparability between periods provides a better understanding of the company’s underlying operating activities. Restructuring costs Costs for impairment together with headcount reductions and other expenses in connection with restructuring. This measure shows the specific costs that have arisen in connection with restructuring of a specific operation, which contributes to a better understanding of the underlying cost level in the continuing operations. Gross margin excl. IAC Refers to Gross profit excl. IAC as a percentage of net sales. Gross margin excl. IAC is cleared of items affecting comparability (IAC) and is thus a better measure than gross margin for showing the company’s margins before the effect of costs such as sales, general and administration. EBITA margin Operating profit before amortization of acquisition-related intangible assets as a percentage of net sales. EBITA margin is a good complement to enable operating margin comparisons with other companies, regardless of whether business activities are based on acquisitions or organic growth. Performance measures, cont. Various types of performance measures and margin measures expressed as a percentage of sales Non-IFRS performance measure Description Reason for use of the measure EBITA margin excl. IAC Operating profit before amortization of acquisition-related intangible assets (EBITA), excl. IAC, as a percentage of net sales. EBITA margin excl. IAC is a good complement to enable operating margin comparisons excluding items affecting comparability (IAC) with other companies, regardless of whether business activities are based on acquisitions or organic growth. Operating margin Operating profit as a percentage of net sales. The operating margin is a key measure together with organic sales growth and capital turnover ratio for monitoring value creation. Operating margin excl. IAC Operating profit, excl. IAC, as a percentage of net sales. This measure is a complement to operating margin, as it shows the operating margin excluding the effects from items affecting comarability (IAC). Operating profit excl. IAC Calculated as operating profit before financial items and tax, excluding items affecting comparability (IAC). Operating profit excl. IAC is a key ratio for control of the units and provides a better understanding of earnings performance of the operations than operating profit. SEKm 2024 2023 2022 OPERATING PROFIT EXCL. IAC Operating profit 18,295 15,148 8,491 Items affecting comparability (IAC) 939 2,641 2,445 Operating profit excl. IAC 19,234 17,789 10,936 Operating margin excl. IAC % 13.2 12.1 8.3 Performance measures, cont. Various types of performance measures and margin measures expressed as a percentage of sales Non-IFRS performance measure Description Reason for use of the measure Financial net margin Net financial items divided by net sales. This measure shows the relationship between net financial items and net sales. Profit before tax excl. IAC Profit before tax excl. IAC is calculated as profit before tax excluding items affecting comparability (IAC). This is a useful measure for showing total profit for the company including financing costs, but not affected by taxes and items affecting comparability (IAC). Tax excl. IAC Tax expenses for the period excluding tax expenses relating to items affecting comparability (IAC). A useful measure to show the total tax expense for the period, adjusted for taxes related to items affecting comparability (IAC). SEKm 2024 2023 2022 TAX EXCL. IAC Tax –4,331 –3,275 –2,006 Tax relating to items affecting comparability (IAC) –194 –524 –200 Tax excl. IAC –4,525 –3,799 –2,206 Contents 127Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Cash flow measures, cont. Various performance measures and costs that have impacted the company’s cash flow Non-IFRS performance measure Description Reason for use of the measure Operating cash flow before investments in operating assets through leases Operating cash flow consists of the sum of operating cash surplus and change in working capital, with deductions for net investments in non-current assets and restructuring costs. This is an important control measure of operating activities that the units control. Investments in operating assets through leases Additional right-of-use assets directly attributable to operating activities. Mainly leases for distribution centers. Investments in operating assets through leases is part of the follow-up of the cash flow that the units control. Operating cash flow Consists of the sum of operating cash surplus and change in working capital, with deductions for net investments in non-current assets and restructuring costs and investments in operating assets through leases. This is an important control measure of operating activities that the units control. Investments in non- operating assets through leases Additional right-of-use assets that are not directly attributable to operating activities, mainly leases for offices. Investments through leases in non-operating assets that the units do not control. These are recognized in the operating cash flow statement as an explanatory item in changes to net debt. SEKm 2024 2023 2022 CASH EARNINGS EBITDA 25,800 23,146 17,502 Financial income and expenses, net –1,931 –2,356 –1,320 Income taxes paid –5,860 –3,615 –2,175 Cash earnings 18,009 17,175 14,007 Items affecting comparability (IAC) excluding depreciation/amortization and impairment 717 1,878 313 Cash earnings excl. IAC 18,726 19,053 14,320 SEKm 2024 2023 2022 OPERATING CASH SURPLUS AND OPERATING CASH FLOW Operating profit 18,295 15,148 8,491 Depreciation and impairment 7,505 7,998 9,011 Items affecting comparability (IAC) excluding depreciation/amortization and impairment 717 1,878 313 Share of profits of associates and joint ventures –78 –39 –38 Adjustment for non-cash items 559 584 623 Operating cash surplus 26,998 25,569 18,400 Change in working capital –408 1,085 –4,224 Investments in non-current assets, net –7,332 –6,819 –5,362 Restructuring costs, etc. –1,456 –1,542 –659 Operating cash flow before investments in operating assets through leases 17,802 18,293 8,155 Investments in operating assets through leases –560 –608 –476 Operating cash flow 17,242 17,685 7,679 A2. Use of alternative performance measures, cont. Performance measures, cont. Various types of performance measures and margin measures expressed as a percentage of sales Non-IFRS performance measure Description Reason for use of the measure Profit for the period excl. IAC Profit for the period excluding items affecting comparability (IAC) and tax relating to items affecting comparability (IAC). Shows the period’s total underlying earnings capacity excluding items affecting comparability (IAC). Net margin Profit for the period as a percentage of net sales for the year. The net margin shows the remaining share of net sales after all of the company’s costs, including income tax, have been deducted. Earnings per share Profit for the period attributable to owners of the Parent company divided by the average number of outstanding shares, excluding shares owned by Essity Aktiebolag (publ). Earnings per share is a good measure of the company’s profitability and is used to determine the value of a company’s outstanding shares. Earnings per share excl. IAC Profit for the period excl. IAC attributable to owners of the Parent company, excluding amortization of acquisition-related intangible assets divided by the average number of outstanding shares, excluding shares owned by Essity Aktiebolag (publ). Earnings per share excl. IAC is a good measure of the company’s profitability and is used to determine the value of a company’s outstanding shares. The measure is a good complement to enable comparison of earnings per share with other companies, regardless of whether business activities are based on acquisitions or organic growth. Cash flow measures Various performance measures and costs that have impacted the company’s cash flow Non-IFRS performance measure Description Reason for use of the measure Cash earnings Cash earnings consist of the net of operating profit before depreciation and amortization of property, plant and equipment and intangible assets (EBITDA), less financial income and expenses and income taxes. A financial measure used when calculating the company’s debt payment capacity, see page 126. Cash earnings excl. IAC Cash earnings excl. IAC consists of the net of operating profit before depreciation and amortization of property, plant and equipment and intangible assets (EBITDA) excl. IAC, less financial income and expenses and income taxes. A financial measure used when calculating the company’s debt payment capacity excl. IAC, see page 126. Operating cash surplus Calculated as operating profit with a reversal of depreciation, amortization and impairment of property, plant and equipment and intangible assets. Share of profits of associates and joint ventures, items affecting comparability and capital gains/losses are excluded. This measure shows the cash flow generated by profit and is part of the follow-up of the cash flow. Investments in non-current assets, net Comprise investments in non-current assets, net, to maintain competitiveness, such as efficiency and replacement measures or investments of an environmental nature and strategic capital expenditures in sites. Shows the size of the capital expenditures required to maintain existing manufacturing capacity and investments in expansion and other growth measures. Contents 128Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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B1. Net sales – Revenues from contracts with customers B. Sales and earnings Accounting principles AP Revenue recognition Essity primarily generates revenues from the sale of finished products to, for example, the retail sector, industries and the healthcare sector. Revenue from sales of services occurs to a certain extent but only accounts for a small portion of the Group’s sales. Essity’s operations and sales are divided into various segments that sell different products in several regions. The product portfolio is diversified but the principles for revenue recognition are the same for all segments. For a description of the products, see the section on Essity’s three business areas, Health & Medical, Consumer Goods and Professional Hygiene on pages 28–34. Essity’s contracts with customers primarily comprise framework agreements without established minimum volumes, which means that a binding contract does not arise until the customer places an order. Performance obligations and timing of revenue recognition Essity’s performance obligations in the contracts consists providing the goods specified in the contracts. The perfor mance obligations are satisfied and the revenue recognized when control of the products is passed to the customer. The timing of when control is passed to the customer is determined by the terms of delivery applied in the contract. For most supply contracts, control is passed when the goods have been delivered to the customer’s warehouse and the customer thereby can control the use and receive the benefits of the goods. Invoicing is normally done in connection with, or directly after, delivery and recognized at a specific point in time, no revenue is recognized over time. Essity has chosen to apply the practical expedient in IFRS 15 not to disclose the remaining performance obligations that have a term of less than one year. Determination of transaction price Essity’s contracts with customers have essentially similar characteristics although specific terms may differ. The trans action price primarily comprises the agreed price for the products less any discounts, which means payments from customers include both fixed and variable amounts. Typically, discounts are provided as credit after the end of the discount period relative to the value of the purchased goods. Discounts may also be provided for defined marketing activities performed by the customer during the period, or when Essity takes part in targeted campaigns with discount vouchers where Essity compensates customers for loss of income as consumers redeem discount vouchers. In a few markets, conditions are in place whereby Essity is subject to penalties if the terms of delivery are not met, in terms of date and volume. Essity’s customers are normally not entitled to return products. Deliveries of faulty products are credited. A refund liability is recognized in the balance sheet under Other liabilities that includes the estimated discounts for each customer. The final discounts are determined at the end of the discount period and refund liability is reduced when the discount is credited to the customer. Trade receivables Once the goods and services have been delivered and control has been passed to the customer, a trade receivable is recognized since this is the point in time when the consideration becomes unconditional, only the passage of time is required for payment to be made. Contract liabilities Contract liabilities relate to bonuses and discounts to customers. Assets that have arisen from expenses to fulfill contracts with customers In the Professional Hygiene business area, Essity supplies dispensers to customers to fulfill contracts for delivery of the business area’s other products, refer to page 33. Expenses for these dispensers are recognized as contract assets under Other noncurrent assets since Essity expects to receive indirect remuneration for these expenses through the sale of the business area’s other products. The dispensers are depreciated over three years according to the average term of the contract with customers. Recognition takes place in accordance with the rules in IFRS 15 since the expense is directly linked to securing contracts with customers. The rules on Property, Plant and Equipment in IAS 16 and IAS 2 Inventories are not deemed to be applicable since there are no economic benefits associated with the dispenser after it has been delivered to the customer. Key assessments and assumptions KAA Key assessments and assumptions are required to estimate the outcome of variable remuneration. The assessment uses the expected value method, which means revenue is recognized when it is highly probable that a significant rever sal will not occur. The estimate of variable remuneration is made at the beginning of the contract and is evaluated for each reporting period. The tables below show consolidated net sales broken down by operating segment: Health & Medical, Consumer Goods and Professional Hygiene. Sold products are distributed to consumers in Health & Medical through the healthcare sector and ecommerce, in Consumer Goods through the retail trade and ecommerce and in Professional Hygiene through businesstobusiness. Net sales in geographic markets reflects the perspective – sold to, which is based on sales to the countries where Essity has its customers, known as its “footprint.” See pages 133–134 for further information. SEKm Health & Medical Consumer Goods Professional Hygiene Other operations Total Group 2024 Revenue from contracts with customers Sale of finished products 28,593 78,872 38,029 –12 145,482 Sale of services 6 20 38 – 64 Total revenues from contracts with customers IS 28,599 78,892 38,067 –12 145,546 Geographical markets Europe 18,627 52,159 16,828 –12 87,601 North America 5,079 3,218 16,282 – 24,579 Latin America 1,609 20,638 3,284 – 25,531 Asia 1,756 503 194 – 2,454 Other 1,528 2,374 1,479 – 5,381 Total revenues from contracts with customers IS 28,599 78,892 38,067 –12 145,546 Product category Incontinence Products 16,611 11,561 28,172 Baby Care 7,114 7,114 Feminine Care 13,873 13,873 Medical Solutions 11,988 11,988 Consumer Tissue 45,886 45,886 Professional Hygiene 38,067 38,067 Other 458 –12 446 Total revenues from contracts with customers IS 28,599 78,892 38,067 –12 145,546 Contents 129Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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SEKm Health & Medical Consumer Goods Professional Hygiene Other operations Total Group 2023 Revenue from contracts with customers Sale of finished products 27,718 79,895 39,442 25 147,080 Sale of services 11 17 39 – 67 Total revenues from contracts with customers IS 27,729 79,912 39,481 25 147,147 Geographical markets Europe 17,981 53,258 17,538 25 88,802 North America 5,132 3,279 17,147 – 25,558 Latin America 1,465 20,562 3,171 – 25,198 Asia 1,641 472 199 – 2,312 Other 1,510 2,341 1,426 – 5,277 Total revenues from contracts with customers IS 27,729 79,912 39,481 25 147,147 Product category Incontinence Products 16,070 10,754 26,824 Baby Care 7,164 7,164 Feminine Care 13,584 13,584 Medical Solutions 11,659 11,659 Consumer Tissue 47,940 47,940 Professional Hygiene 39,481 39,481 Other 470 25 495 Total revenues from contracts with customers IS 27,729 79,912 39,481 25 147,147 SEKm Health & Medical Consumer Goods Professional Hygiene Other operations Total Group 2022 Revenue from contracts with customers Sale of finished products 24,700 72,226 34,361 –21 131,266 Sale of services 8 15 31 – 54 Total revenues from contracts with customers IS 24,708 72,241 34,392 –21 131,320 Geographical markets Europe 15,692 50,414 15,940 –21 82,025 North America 4,609 1,974 14,546 21,129 Latin America 1,302 17,400 2,418 21,120 Asia 1,448 472 194 2,114 Other 1,657 1,981 1,294 4,932 Total revenues from contracts with customers IS 24,708 72,241 34,392 –21 131,320 Product category Incontinence Products 14,275 8,892 23,167 Baby Care 7,094 7,094 Feminine Care 10,659 10,659 Medical Solutions 10,433 10,433 Consumer Tissue 45,114 45,114 Professional Hygiene 34,392 34,392 Other 482 –21 461 Total revenues from contracts with customers IS 24,708 72,241 34,392 –21 131,320 Trade receivables and contractual liabilities SEKm Note 2024 2023 2022 Trade receivables TE3:1 E3 23,538 21,920 25,990 Contractual liabilities – advance payments from customers D5 7,874 7,782 8,016 Trade receivables increased by SEK 1,618m in 2024 to SEK 23,538m due to a higher proportion of overdue trade receiv ables compared with the previous year and higher sales in the final two months of 2024 compared with the correspond ing period in the preceding year. Assets that have arisen from expenses to fulfill contracts with customers SEKm 2024 2023 2022 Value, January 1 TE3:2 650 691 607 Costs for the year 467 466 474 Depreciation –487 –467 –481 Translation differences 65 –40 91 Value, December 31 695 650 691 B1. Net sales – Revenues from contracts with customers, cont. B2. Segment reporting Accounting principles AP Operating segments are recognized in a manner that complies with the internal reporting according to IFRS accounting standards submitted to the chief operating decision maker. At Essity, this function is defined as the company’s President who is responsible for allocating resources, assessing the result of the operating segments and manages the daytoday administration of the Group in accordance with the Board’s guidelines and terms of reference. One Executive Vice President and the Executive Management Team support him in his work. Essity’s three business areas, Health & Medical, Consumer Goods and Professional Hygiene comprise the operating segments. For management purposes, the Group is organized into business areas based on the company’s customer and sales channels which lead to an expansion of the offerings to new and adjacent categories as well as extended service content on the basis of customer and consumer needs. Essity’s offering in Health & Medical comprises the categories Incontinence Products, Health Care and Medical Solu tions. The offering includes incontinence products, wound care, compression therapy, orthopedics, skincare products and digital solutions with sensor technology under brands such as TENA, Leukoplast, Cutimed, JOBST, Actimove and DeltaCast. Distribution channels are pharmacies, medical device stores, hospitals, distributors and care institutions and ecommerce. Essity’s offering in Consumer Goods includes the categories Incontinence Products Retail, Baby Care, Feminine Care and Consumer Tissue. The offering includes incontinence products, pads, diapers, wet wipes, skin cream, intimate soaps, leakproof apparel, menstrual cups, toilet paper, household towels, handkerchiefs, facial tissues and napkins. The products are sold under brands such as the global leader TENA and other strong brands including Libero, Libresse, Nosotras, Saba, TOM Organic, Lotus, Regio and Tempo. Distribution channels for the products are the retail trade and ecommerce. Essity’s offering in Professional Hygiene comprises complete hygiene solutions, including toilet paper, paper hand towels, napkins, hand soap, hand lotion, hand sanitizers, dispensers, cleaning and wiping products as well as service and maintenance under the globally leading Tork brand. Essity also offers digital solutions, such as Internet of Things sensor technology that enables datadriven cleaning. Customers consist of companies and office buildings, universities, healthcare facilities, industries, restaurants, hotels, stadiums and other public venues. Distribution channels for the products consist of distributors and ecommerce. Other operations comprise Groupwide functions and nonallocated tax. Essity’s business is an integrated operation in the form of a matrix organization with four business units (Health & Medical, Consumer Goods EMEA, Consumer Goods Americas and Professional Hygiene), the independent unit Essity Australasia and three global units (Global Supply Chain, Global Digital and Business Services and Global Marketing & Innovation). The business units have limited responsibility to impact operational costs, since the global units are respon sible for production, planning, technology development, sourcing and product development. Contents 130Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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The tables below show parts of the consolidated balance sheet and income statement broken down by the operating segments Health & Medical, Consumer Goods and Professional Hygiene. SEKm Health & Medical Consumer Goods Professional Hygiene Other operations Total Group 2024 Net sales IS 28,599 78,892 38,067 –12 145,546 Cost of goods sold IS –15,761 –56,144 –26,010 –14 –97,929 Sales, general and administration IS –7,329 –13,324 –5,221 –1,477 –27,351 Share of results of associates and joint ventures IS – 85 –7 – 78 Operating profit/loss before amortization of acquisition- related intangible assets (EBITA) excl. IAC 5,509 9,509 6,829 –1,503 20,344 Amortization of acquisitionrelated intangible assets IS –841 –247 –22 – –1,110 Operating profit/loss excl. IAC 4,668 9,262 6,807 –1,503 19,234 Items affecting comparability (IAC) TB2:1 –136 –461 –156 –186 –939 Operating profit/loss IS 4,532 8,801 6,651 –1,689 18,295 Financial income IS 593 Financial expenses IS –2,524 Tax expense for the period IS –4,331 Profit for the period, continuing operations IS 12,033 OTHER DISCLOSURES Capital employed 34,566 55,293 25,998 3,653 119,510 Investments in associates and joint ventures BS 7 371 –28 1 351 Net investments/acquisitions –967 –4,326 –2,024 –643 –7,960 Depreciation –1,786 –3,149 –1,807 –484 –7,226 Expenses, in addition to depreciation/amortization, not matched by payments 19 28 512 – 559 NET SALES BY REGION Europe 65 66 44 60 North America 18 4 43 17 Latin America 6 26 8 17 Asia 6 1 1 2 Other 5 3 4 4 Total % 100 100 100 100 Mature markets 80 67 84 74 Emerging markets 20 33 16 26 Total % 100 100 100 100 SEKm Health & Medical Consumer Goods Professional Hygiene Other operations Total Group 2023 Net sales IS 27,729 79,912 39,481 25 147,147 Cost of goods sold IS –16,548 –57,918 –28,104 –57 –102,627 Sales, general and administration IS –7,144 –12,231 –5,094 –1,192 –25,661 Share of results of associates and joint ventures IS – 34 5 – 39 Operating profit/loss before amortization of acquisition- related intangible assets (EBITA) excl. IAC 4,037 9,797 6,288 –1,224 18,898 Amortization of acquisitionrelated intangible assets IS –839 –248 –22 – –1,109 Operating profit/loss excl. IAC 3,198 9,549 6,266 –1,224 17,789 Items affecting comparability (IAC) TB2:1 –286 –828 –1,487 –40 –2,641 Operating profit/loss IS 2,912 8,721 4,779 –1,264 15,148 Financial income IS 412 Financial expenses IS –2,768 Tax expense for the period IS –3,275 Profit for the period, continuing operations IS 9,517 OTHER DISCLOSURES Capital employed 32,762 52,009 24,021 1,958 110,750 Investments in associates and joint ventures BS 5 303 –15 1 294 Net investments/acquisitions –1,205 –3,698 –1,886 –820 –7,609 Depreciation –1,798 –3,221 –1,888 –263 –7,170 Expenses, in addition to depreciation/amortization, not matched by payments 4 59 519 2 584 NET SALES BY REGION Europe 65 67 44 60 North America 19 4 43 17 Latin America 5 26 8 17 Asia 6 1 1 2 Other 5 2 4 4 Total % 100 100 100 100 Mature markets 81 67 85 74 Emerging markets 19 33 15 26 Total % 100 100 100 100 B2. Segment reporting, cont. Contents 131Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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SEKm Health & Medical Consumer Goods Professional Hygiene Other operations Total Group 2022 Net sales IS 24,708 72,241 34,393 –22 131,320 Cost of goods sold IS –15,472 –55,645 –26,358 80 –97,395 Sales, general and administration IS –6,332 –10,271 –4,201 –1,112 –21,916 Share of results of associates and joint ventures IS – 29 9 – 38 Operating profit/loss before amortization of acquisition- related intangible assets (EBITA) excl. IAC 2,904 6,354 3,843 –1,054 12,047 Amortization of acquisitionrelated intangible assets IS –846 –245 –20 – –1,111 Operating profit excl. IAC 2,058 6,109 3,823 –1,054 10,936 Items affecting comparability (IAC) TB2:1 –126 –1,741 –451 –127 –2,445 Operating profit/loss IS 1,932 4,368 3,372 –1,181 8,491 Financial income IS 141 Financial expenses IS –1,461 Tax expense for the period IS –2,006 Profit for the period, continuing operations IS 5,165 OTHER DISCLOSURES Capital employed 34,062 52,667 27,741 323 114,793 Investments in associates and joint ventures BS 7 288 –4 1 292 Net investments/acquisitions –768 –7,513 –1,737 –775 –10,793 Depreciation –1,715 –3,067 –1,798 –258 –6,838 Expenses, in addition to depreciation/amortization, not matched by payments 2 107 514 – 623 NET SALES BY REGION Europe 64 70 46 62 North America 19 3 42 16 Latin America 5 24 7 16 Asia 6 1 1 2 Other 6 2 4 4 Total % 100 100 100 100 Mature markets 81 66 85 74 Emerging markets 19 34 15 26 Total % 100 100 100 100 Items affecting comparability (IAC) allocated by operating segment TB2:1 SEKm Health & Medical Consumer Goods Professional Hygiene Other Total 2024 Items affecting comparability (IAC) – cost of goods sold –98 –257 –128 – –483 Items affecting comparability (IAC) – sales, general and administration 13 –185 –28 –186 –386 Items affecting comparability (IAC) – acquisition related intangible assets –51 –19 – – –70 Total –136 –461 –156 –186 –939 2023 Items affecting comparability (IAC) – cost of goods sold –102 –241 –1,003 –3 –1,349 Items affecting comparability (IAC) – sales, general and administration –184 –587 –134 –37 –942 Items affecting comparability (IAC) – acquisition related intangible assets – – –350 – –350 Total –286 –828 –1,487 –40 –2,641 2022 Items affecting comparability (IAC) – cost of goods sold –74 –1,685 –137 –3 –1,899 Items affecting comparability (IAC) – sales, general and administration –52 –34 –62 –124 –272 Items affecting comparability (IAC) – acquisition related intangible assets – –22 –252 – –274 Total –126 –1,741 –451 –127 –2,445 Internal sales: No internal sales are carried out between the segments. Production in shared facilities is allocated among the segments already at the operational reporting stage. Customers: Essity had no customers in 2024, 2023 or 2022 from which it generated income that accounted for more than 10% of the company’s net sales. Essity’s ten largest customers account for 24.3% (25.8; 23.0) of the company’s sales. B2. Segment reporting, cont. Contents 132Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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B2a. Segment reporting, cont. Net sales – sold to1) Net sales – sold by1) 2024 20232) 2022 2024 2023 2022 Group by country continuing operations TB2:2 SEKm % SEKm % SEKm % SEKm % SEKm % SEKm % Sweden 3,599 2.5 3,647 2.5 3,496 2.7 4,132 2.8 4,251 2.9 3,986 3.0 EU excluding Sweden Germany 17,831 12.3 18,276 12.4 16,009 12.2 19,248 13.3 19,303 13.1 16,751 12.8 France 11,111 7.6 12,334 8.4 11,701 8.9 12,333 8.5 12,553 8.5 11,904 9.1 Spain 8,934 6.1 8,027 5.5 6,811 5.2 8,076 5.5 8,185 5.6 6,980 5.3 Netherlands 5,192 3.6 5,165 3.5 4,422 3.4 5,397 3.7 5,295 3.6 4,496 3.4 Italy 4,717 3.2 4,651 3.2 4,134 3.1 4,860 3.3 4,804 3.3 4,379 3.3 Austria 3,014 2.1 2,952 2.0 2,537 1.9 3,342 2.3 3,327 2.3 2,770 2.1 Finland 2,161 1.5 2,180 1.5 1,855 1.4 2,155 1.5 2,149 1.4 1,826 1.4 Belgium 2,038 1.4 2,054 1.4 1,786 1.4 2,198 1.5 2,214 1.3 1,937 1.5 Denmark 1,972 1.4 1,937 1.3 1,799 1.4 1,930 1.3 1,923 1.4 1,773 1.3 Poland 1,859 1.3 1,646 1.1 1,282 1.0 2,021 1.4 1,739 1.2 1,355 1.0 Hungary 1,565 1.1 1,580 1.1 1,357 1.0 1,680 1.2 1,664 1.1 1,422 1.1 Czech Republic 1,131 0.8 1,135 0.8 920 0.7 1,094 0.8 1,122 0.8 921 0.7 Ireland 746 0.5 763 0.5 721 0.5 679 0.5 692 0.5 662 0.5 Romania 726 0.5 697 0.5 573 0.4 629 0.4 606 0.4 495 0.4 Portugal 634 0.4 623 0.4 555 0.4 434 0.3 432 0.3 396 0.3 Croatia 581 0.4 549 0.4 446 0.3 – – – – – – Slovakia 524 0.4 472 0.3 370 0.3 830 0.6 784 0.5 619 0.5 Greece 480 0.3 477 0.3 513 0.4 340 0.2 361 0.2 337 0.3 Lithuania 446 0.3 424 0.3 322 0.2 447 0.3 424 0.3 322 0.2 Latvia 284 0.2 250 0.2 234 0.2 279 0.2 245 0.2 230 0.2 Estonia 242 0.2 235 0.2 204 0.2 242 0.2 235 0.2 204 0.2 Rest of EU excluding Sweden 658 0.5 600 0.4 487 0.4 – – – – – – Total EU excluding Sweden 66,846 46.1 67,027 45.7 59,038 44.9 68,214 47.0 68,057 46.2 59,779 45.6 Rest of Europe UK 11,520 7.9 11,495 7.8 11,099 8.5 11,562 7.9 11,640 7.9 11,230 8.6 Switzerland 2,227 1.5 2,153 1.5 2,041 1.6 2,104 1.4 2,054 1.4 1,980 1.5 Norway 1,919 1.3 1,844 1.3 1,770 1.3 1,933 1.3 1,856 1.3 1,776 1.4 Ukraine 583 0.4 591 0.4 451 0.3 519 0.4 534 0.4 420 0.3 Turkey 276 0.2 256 0.2 251 0.2 256 0.2 241 0.2 249 0.2 Russia – – 1,166 0.8 3,346 2.5 – – 1,237 0.8 3,559 2.7 Rest of Europe, excluding EU 631 0.4 624 0.4 533 0.4 – – – – – – Total Rest of Europe 17,156 11.7 18,129 12.4 19,491 14.8 16,374 11.2 17,562 12.0 19,214 14.7 TOTAL EUROPE 87,601 60.3 88,803 60.6 82,025 62.4 88,720 61.0 89,870 61.1 82,979 63.3 1) Net sales have been recognized from two perspectives. The first column “Net sales – sold to” is based on sales to the countries where Essity has its customers, or Essity’s “footprint”. The second column “Net sales – sold by” takes the perspective of IFRS 8, meaning revenue from external customers where the company is domiciled. 2) The percentage breakdown for “Net sales – sold to” for the comparative year 2023 has been corrected. Contents 133Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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B2a. Segment reporting, cont. Net sales – sold to1) Net sales – sold by1) 2024 20232) 2022 2024 2023 2022 Group by country continuing operations TB2:2 SEKm % SEKm % SEKm % SEKm % SEKm % SEKm % North America USA 20,892 14.4 21,805 14.8 18,165 13.8 20,855 14.3 21,842 14.8 18,178 13.8 Canada 3,679 2.5 3,746 2.5 2,958 2.3 3,679 2.5 3,748 2.5 2,968 2.3 Rest of North America 8 0.0 8 0.0 6 0.0 – – – – – – TOTAL NORTH AMERICA 24,579 16.9 25,559 17.3 21,129 16.1 24,534 16.8 25,590 17.3 21,146 16.1 Latin America Mexico 11,493 7.8 11,090 7.5 8,418 6.4 12,542 8.6 12,060 8.2 9,257 7.0 Colombia 4,989 3.3 4,742 3.2 4,579 3.5 5,245 3.6 4,897 3.3 4,794 3.7 Ecuador 1,591 1.1 1,796 1.2 1,766 1.3 1,555 1.1 1,766 1.2 1,737 1.3 Brazil 1,457 1.0 1,404 1.0 1,024 0.8 1,457 1.0 1,404 0.9 1,024 0.8 Chile 1,212 0.8 1,408 1.0 1,191 0.9 1,233 0.8 1,426 1.0 1,204 0.9 Costa Rica 829 0.6 800 0.5 581 0.4 945 0.6 980 0.7 719 0.5 Argentina 813 0.6 845 0.6 647 0.5 843 0.6 856 0.6 648 0.5 Peru 755 0.5 740 0.5 683 0.5 743 0.5 722 0.5 665 0.5 Dominican Republic 536 0.4 571 0.4 625 0.5 513 0.4 556 0.4 625 0.5 Nicaragua 316 0.2 296 0.2 217 0.2 – – – – – – Guatemala 290 0.2 275 0.2 221 0.2 – – – – – – Puerto Rico 253 0.2 297 0.2 245 0.2 214 0.1 234 0.2 194 0.1 Panama 181 0.1 179 0.1 211 0.2 – – – – – – Rest of Latin America 816 0.6 754 0.5 712 0.5 268 0.2 231 0.2 216 0.2 TOTAL LATIN AMERICA 25,531 17.4 25,197 17.1 21,120 16.1 25,558 17.5 25,132 17.2 21,083 16.0 Asia Japan 495 0.3 572 0.4 585 0.4 427 0.3 538 0.4 533 0.4 Indonesia 299 0.2 277 0.2 241 0.2 295 0.2 277 0.2 246 0.2 India 292 0.2 272 0.2 237 0.2 287 0.2 274 0.2 233 0.2 China 153 0.1 32 0.0 30 0.0 – – – – – – South Korea 66 0.0 54 0.0 39 0.0 – – – – – – Singapore 9 0.0 2 0.0 2 0.0 – – – – – – Malaysia 5 0.0 3 0.0 10 0.0 – – – – 7 0.0 Rest of Asia 1,135 0.8 1,101 0.7 969 0.8 497 0.3 358 0.2 300 0.2 TOTAL ASIA 2,454 1.6 2,313 1.5 2,113 1.6 1,506 1.0 1,447 1.0 1,319 1.0 Rest of the world Australia 3,171 2.2 3,044 2.1 2,908 2.2 3,177 2.3 3,061 2.1 2,902 2.2 New Zealand 1,301 0.9 1,378 0.9 1,265 1.0 1,291 0.9 1,368 0.9 1,261 1.0 South Africa 372 0.3 337 0.2 319 0.2 542 0.4 469 0.3 435 0.3 Other rest of the world 537 0.4 516 0.3 441 0.4 218 0.1 210 0.1 195 0.1 TOTAL REST OF THE WORLD 5,381 3.8 5,275 3.5 4,933 3.8 5,228 3.7 5,108 3.4 4,793 3.6 Total Group 145,546 100.0 147,147 100.0 131,320 100.0 145,546 100.0 147,147 100.0 131,320 100.0 1) Net sales have been recognized from two perspectives. The first column “Net sales – sold to” is based on sales to the countries where Essity has its customers, or Essity’s “footprint”. The second column “Net sales – sold by” takes the perspective of IFRS 8, meaning revenue from external customers where the company is domiciled. 2) The percentage breakdown for “Net sales – sold to” for the comparative year 2023 has been corrected. Contents 134Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Net sales – sold to1) Net sales – sold by1) 2024 20232) 20222) 2024 2023 2022 Group by country total operations TB2:2 SEKm % SEKm % SEKm % SEKm % SEKm % SEKm % Sweden 3,599 2.4 3,626 2.1 3,496 2.2 4,132 2.8 4,251 2.4 3,986 2.6 EU excluding Sweden Germany 17,831 11.9 18,278 10.5 16,009 10.3 19,248 12.8 19,303 11.1 16,751 10.7 France 11,111 7.4 12,335 7.1 11,701 7.5 12,333 8.2 12,553 7.2 11,904 7.6 Spain 8,934 6.0 8,027 4.6 6,811 4.4 8,076 5.4 8,185 4.7 6,980 4.5 Netherlands 5,192 3.5 5,165 3.0 4,422 2.8 5,397 3.6 5,295 3.0 4,496 2.9 Italy 4,717 3.1 4,651 2.7 4,134 2.6 4,860 3.2 4,804 2.8 4,379 2.8 Austria 3,014 2.0 2,952 1.7 2,537 1.6 3,342 2.2 3,327 1.9 2,770 1.8 Finland 2,161 1.4 2,180 1.3 1,855 1.2 2,155 1.5 2,149 1.3 1,826 1.2 Belgium 2,038 1.4 2,054 1.2 1,786 1.1 2,198 1.3 2,214 1.1 1,937 1.1 Denmark 1,972 1.3 1,937 1.1 1,799 1.2 1,930 1.4 1,923 1.2 1,773 1.2 Poland 1,859 1.2 1,646 0.9 1,283 0.8 2,021 1.3 1,739 1.0 1,355 0.9 Hungary 1,565 1.0 1,580 0.9 1,357 0.9 1,680 1.1 1,664 1.0 1,422 0.9 Czech Republic 1,131 0.8 1,135 0.7 920 0.6 1,094 0.7 1,122 0.6 922 0.6 Ireland 746 0.5 763 0.4 721 0.5 679 0.5 692 0.4 662 0.4 Romania 726 0.4 697 0.4 573 0.4 629 0.4 606 0.4 495 0.3 Portugal 634 0.4 623 0.4 555 0.4 434 0.3 432 0.3 396 0.2 Croatia 581 0.4 549 0.3 446 0.3 – – – – – – Slovakia 524 0.3 472 0.3 370 0.2 830 0.6 784 0.5 619 0.4 Greece 480 0.3 477 0.3 513 0.3 340 0.2 361 0.2 337 0.2 Lithuania 446 0.3 424 0.2 322 0.2 447 0.3 424 0.2 322 0.2 Latvia 284 0.2 250 0.1 234 0.1 279 0.2 245 0.1 230 0.2 Estonia 242 0.2 235 0.1 204 0.1 242 0.2 235 0.1 204 0.1 Rest of EU excluding Sweden 658 0.4 601 0.3 497 0.3 – – – – – – Total EU excluding Sweden 66,846 44.4 67,031 38.5 59,049 37.8 68,214 45.4 68,057 39.1 59,780 38.2 Rest of Europe UK 11,520 7.7 11,496 6.6 11,099 7.1 11,562 7.7 11,640 6.7 11,230 7.2 Switzerland 2,227 1.5 2,153 1.2 2,041 1.3 2,104 1.4 2,054 1.2 1,980 1.3 Norway 1,919 1.3 1,844 1.1 1,770 1.1 1,933 1.3 1,856 1.1 1,776 1.1 Ukraine 583 0.4 591 0.3 451 0.3 519 0.3 534 0.3 420 0.3 Turkey 276 0.2 256 0.1 251 0.2 256 0.2 241 0.1 249 0.2 Russia – – 1,167 0.7 3,349 2.1 – – 1,237 0.7 3,559 2.3 Rest of Europe, excluding EU 631 0.4 624 0.4 533 0.3 – – – – – – Total Rest of Europe 17,156 11.5 18,131 10.4 19,494 12.4 16,374 10.9 17,562 10.1 19,214 12.4 TOTAL EUROPE 87,601 58.3 88,788 51.0 82,039 52.4 88,720 59.1 89,870 51.6 82,980 53.2 1) Net sales have been recognized from two perspectives. The first column “Net sales – sold to” is based on sales to the countries where Essity has its customers, or Essity’s “footprint”. The second column “Net sales – sold by” takes the perspective of IFRS 8, meaning revenue from external customers where the company is domiciled. 2) The percentage breakdown for “Net sales – sold to” for the comparative years 2022 and 2023 has been corrected. B2a. Segment reporting, cont. Contents 135Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Net sales – sold to1) Net sales – sold by1) 2024 20232) 20222) 2024 2023 2022 Group by country total operations TB2:2 SEKm % SEKm % SEKm % SEKm % SEKm % SEKm % North America USA 20,896 13.9 21,816 12.5 18,179 11.7 20,855 13.9 21,842 12.6 18,178 11.6 Canada 3,682 2.5 3,754 2.2 2,963 1.9 3,679 2.5 3,748 2.2 2,968 1.9 Rest of North America 8 0.0 8 0.0 6 0.0 – – – – – – TOTAL NORTH AMERICA 24,586 16.4 25,578 14.7 21,148 13.6 24,534 16.4 25,590 14.8 21,146 13.5 Latin America Mexico 11,496 7.7 11,090 6.4 8,419 5.4 12,542 8.4 12,060 6.9 9,257 5.9 Colombia 4,990 3.3 4,742 2.7 4,579 2.9 5,245 3.5 4,897 2.8 4,794 3.1 Ecuador 1,591 1.1 1,796 1.0 1,766 1.1 1,555 1.0 1,766 1.0 1,737 1.1 Brazil 1,457 1.0 1,404 0.8 1,024 0.7 1,457 1.0 1,404 0.8 1,024 0.7 Chile 1,212 0.8 1,409 0.8 1,192 0.8 1,233 0.8 1,426 0.8 1,204 0.8 Costa Rica 829 0.6 800 0.5 581 0.4 945 0.6 980 0.6 719 0.5 Argentina 813 0.5 845 0.5 647 0.4 843 0.6 856 0.5 648 0.4 Peru 755 0.4 741 0.4 684 0.5 743 0.5 722 0.4 665 0.4 Dominican Republic 536 0.4 571 0.3 625 0.4 513 0.3 556 0.3 625 0.4 Nicaragua 316 0.2 296 0.2 217 0.1 – – – – – – Guatemala 290 0.2 275 0.2 221 0.1 – – – – – – Puerto Rico 253 0.2 297 0.2 245 0.2 214 0.1 234 0.1 194 0.1 Panama 183 0.1 183 0.1 212 0.1 – – – – – – Rest of Latin America 816 0.5 755 0.4 714 0.5 268 0.2 231 0.1 216 0.2 TOTAL LATIN AMERICA 25,537 17.0 25,204 14.5 21,126 13.6 25,558 17.0 25,132 14.3 21,083 13.6 Asia China 3,847 2.6 22,805 13.1 21,099 13.5 3,818 2.5 23,154 13.3 21,438 13.7 Japan 569 0.4 805 0.5 858 0.5 427 0.3 538 0.3 533 0.3 Malaysia 454 0.3 2,272 1.3 2,117 1.4 472 0.3 2,487 1.4 2,388 1.5 Indonesia 300 0.2 289 0.2 252 0.2 297 0.2 289 0.2 257 0.2 India 292 0.2 273 0.2 238 0.2 287 0.2 274 0.2 233 0.1 South Korea 123 0.1 320 0.2 272 0.2 59 0.0 276 0.2 243 0.2 Singapore 94 0.1 414 0.2 377 0.2 76 0.1 350 0.2 315 0.2 Rest of Asia 1,269 0.8 1,824 1.0 1,639 1.0 603 0.4 850 0.5 765 0.4 TOTAL ASIA 6,948 4.7 29,002 16.7 26,852 17.2 6,039 4.0 28,218 16.3 26,172 16.6 Rest of the world Australia 3,179 2.1 3,067 1.8 2,923 1.9 3,177 2.1 3,061 1.8 2,902 1.9 New Zealand 1,306 0.9 1,380 0.8 1,291 0.8 1,291 0.9 1,368 0.8 1,261 0.8 South Africa 374 0.2 368 0.2 345 0.2 542 0.4 469 0.3 435 0.3 Other Rest of the world 548 0.4 530 0.3 449 0.3 218 0.1 209 0.1 194 0.1 TOTAL REST OF THE WORLD 5,407 3.6 5,345 3.1 5,008 3.2 5,228 3.5 5,107 3.0 4,792 3.1 Total Group 150,079 100.0 173,917 100.0 156,173 100.0 150,079 100.0 173,917 100.0 156,173 100.0 1) Net sales have been recognized from two perspectives. The first column “Net sales – sold to” is based on sales to the countries where Essity has its customers, or Essity’s “footprint”. The second column “Net sales – sold by” takes the perspective of IFRS 8, meaning revenue from external customers where the company is domiciled. 2) The percentage breakdown for “Net sales – sold to” for the comparative years 2022 and 2023 has been corrected. B2a. Segment reporting, cont. Contents 136Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Average number of employees1) Non-current assets2) Group by country continuing operations TB2:2 2024 Of whom men, % Of whom women, % 20233) Of whom men, % Of whom women, % 20223) Of whom men, % Of whom women, % 2024 SEKm 2023 SEKm 2022 SEKm Sweden 2,079 52 48 2,027 52 48 2,040 52 48 5,588 5,279 5,126 EU excluding Sweden Germany 4,456 75 25 4,423 74 26 4,244 74 26 28,568 27,462 26,822 France 2,355 66 34 2,327 66 34 2,294 66 34 9,711 9,172 8,861 Spain 1,269 72 28 1,203 73 27 1,156 73 27 3,859 3,522 3,516 Netherlands 1,232 83 17 1,222 83 17 1,163 83 17 3,238 3,256 3,509 Slovakia 964 68 32 956 64 36 964 62 38 702 585 636 Italy 931 73 27 924 74 26 900 75 25 3,852 3,594 4,049 Poland 832 72 28 815 72 28 797 72 28 2,449 1,967 1,612 Austria 509 84 16 502 83 17 497 83 17 974 914 888 Belgium 441 81 19 461 82 18 453 82 18 711 693 759 Portugal 300 45 55 193 45 55 40 47 53 240 228 148 Finland 282 69 31 281 69 31 282 70 30 1,063 997 1,047 Denmark 113 41 59 115 40 60 116 41 59 29 30 34 Hungary 109 38 62 108 39 61 106 39 61 19 10 11 Czech Republic 57 55 45 58 52 48 59 49 51 9 10 12 Greece 45 60 40 45 58 42 45 53 47 15 13 12 Rest of EU excluding Sweden 110 43 57 110 41 59 103 42 58 65 64 56 Total EU excluding Sweden 14,005 72 28 13,743 72 28 13,219 72 28 55,504 52,517 51,972 Rest of Europe UK 1,534 76 24 1,553 76 24 1,518 75 25 6,647 6,226 5,970 Norway 74 47 53 80 47 53 83 48 52 18 5 9 Ukraine 62 39 61 62 40 60 65 40 60 14 10 15 Turkey 52 60 40 85 71 29 108 73 27 23 12 20 Russia – – – 785 63 37 1,308 64 36 – – – Rest of Europe, excluding EU 35 29 71 39 36 64 42 40 60 66 64 61 Total Rest of Europe 1,757 72 28 2,604 69 31 3,124 69 31 6,768 6,317 6,075 TOTAL EUROPE 17,841 70 30 18,374 69 31 18,383 69 31 67,860 64,113 63,173 1) Within the framework of Essity’s employee data there are four ways to stipulate gender identity: woman, man, nonbinary and gendernotdeclared. The percentage of employees in the latter two response alternatives constitute a nonmaterial share, which is why these groups are not reported separately. The average number of employees is calculated as an average over five quarters. 2) Information about noncurrent assets by country refers to intangible assets and property, plant and equipment according to Notes D1 and D2 and rightofuse assets according to Note G1. 3) The average number of employees for the comparative years 2022 and 2023 has been corrected. B2b. Segment reporting, cont. Contents 137Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Average number of employees1) Non-current assets2) Group by country continuing operations TB2:2 2024 Of whom men, % Of whom women, % 20233) Of whom men, % Of whom women, % 20223) Of whom men, % Of whom women, % 2024 SEKm 2023 SEKm 2022 SEKm North America USA 3,053 70 30 3,250 71 29 3,211 71 29 21,118 19,760 21,696 Canada 593 39 61 404 50 50 336 58 42 4,975 4,904 4,979 TOTAL NORTH AMERICA 3,646 65 35 3,654 69 31 3,547 70 30 26,093 24,664 26,675 Latin America Mexico 3,939 63 37 3,830 64 36 3,574 66 34 6,577 6,881 6,059 Colombia 3,426 68 32 3,386 69 31 3,413 69 31 2,395 2,461 2,013 Ecuador 928 70 30 959 71 29 979 72 28 748 674 699 Brazil 493 55 45 494 55 45 494 54 46 539 620 496 Chile 434 67 33 462 71 29 470 71 29 547 565 634 Argentina 321 63 37 312 62 38 310 63 37 206 11 26 Dominican Republic 247 68 32 260 67 33 257 68 32 257 247 263 Peru 136 46 54 136 46 54 135 49 51 424 388 395 Costa Rica 101 51 49 98 54 46 98 55 45 22 16 6 Rest of Latin America 67 51 49 60 42 58 56 41 59 29 2 2 TOTAL LATIN AMERICA 10,092 65 35 9,997 66 34 9,786 67 33 11,744 11,865 10,593 Asia India 313 90 10 316 91 9 318 91 9 90 65 68 Pakistan 201 76 24 218 76 24 227 74 26 9 4 5 Indonesia 144 65 35 146 64 36 148 62 38 386 384 416 Japan 92 44 56 108 46 54 114 44 56 40 48 58 Singapore 4 48 52 3 40 60 – – – – – 7 China 2 50 50 2 50 50 2 50 50 – 109 20,114 Malaysia – – – – – – – – – – – 2,354 Rest of Asia 88 43 57 81 40 60 81 44 56 202 161 974 TOTAL ASIA 844 72 28 874 72 28 890 72 28 727 771 23,996 Rest of the world Australia 426 51 49 416 51 49 389 53 47 5,087 5,332 5,549 South Africa 373 38 62 365 41 59 385 43 57 608 582 675 New Zealand 292 77 23 317 73 27 316 71 29 2,096 2,153 2,327 Fiji 89 78 22 86 77 23 86 78 22 48 45 42 Other Rest of the world 1 100 – 1 100 – 1 100 – – – – TOTAL REST OF THE WORLD 1,181 55 45 1,185 55 45 1,177 57 43 7,839 8,112 8,593 Total Group 33,604 67 33 34,084 68 32 33,783 68 32 114,263 109,525 133,030 1) Within the framework of Essity’s employee data there are four ways to stipulate gender identity: woman, man, nonbinary and gendernotdeclared. The percentage of employees in the latter two response alternatives constitute a nonmaterial share, which is why these groups are not reported separately. The average number of employees is calculated as an average over five quarters. 2) Information about noncurrent assets by country refers to intangible assets and property, plant and equipment according to Notes D1 and D2 and rightofuse assets according to Note G1. 3) The average number of employees for the comparative years 2022 and 2023 has been corrected. B2b. Segment reporting, cont. Contents 138Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Average number of employees1) Group by country total operations TB2:2 2024 Of whom men, % Of whom women, % 20232) Of whom men, % Of whom women, % 2022 Of whom men, % Of whom women, % Sweden 2,079 52 48 2,027 52 48 2,040 52 48 EU excluding Sweden Germany 4,456 75 25 4,423 74 26 4,244 74 26 France 2,355 66 34 2,327 66 34 2,294 66 34 Spain 1,269 72 28 1,203 73 27 1,156 73 27 Netherlands 1,232 83 17 1,222 83 17 1,163 83 17 Slovakia 964 68 32 956 64 36 964 62 38 Italy 931 73 27 924 74 26 900 75 25 Poland 832 72 28 815 72 28 797 72 28 Austria 509 84 16 502 83 17 497 83 17 Belgium 441 81 19 461 82 18 453 82 18 Portugal 300 45 55 193 45 55 40 47 53 Finland 282 69 31 281 69 31 282 70 30 Denmark 113 41 59 115 40 60 116 41 59 Hungary 109 38 62 108 39 61 106 39 61 Czech Republic 57 55 45 58 52 48 59 49 51 Greece 45 60 40 45 58 42 45 53 47 Rest of EU excluding Sweden 110 43 57 110 41 59 103 42 58 Total EU excluding Sweden 14,005 72 28 13,743 72 28 13,219 72 28 Rest of Europe UK 1,534 76 24 1,553 76 24 1,518 75 25 Norway 74 47 53 80 47 53 83 48 52 Ukraine 62 39 61 62 40 60 65 40 60 Turkey 52 60 40 85 71 29 108 73 27 Russia – – – 785 63 37 1,308 64 36 Rest of Europe, excluding EU 35 29 71 39 36 64 42 40 60 Total Rest of Europe 1,757 72 28 2,604 69 31 3,124 69 31 TOTAL EUROPE 17,841 70 30 18,374 69 31 18,383 69 31 1) Within the framework of Essity’s employee data there are four ways to stipulate gender identity: woman, man, nonbinary and gendernotdeclared. The percentage of employees in the latter two response alternatives constitute a nonmaterial share, which is why these groups are not reported separately. The average number of employees is calculated as an average over five quarters. 2) The average number of employees for the comparative year 2023 has been corrected. B2b. Segment reporting, cont. Contents 139Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Average number of employees1) Group by country total operations TB2:2 2024 Of whom men, % Of whom women, % 20232) Of whom men, % Of whom women, % 2022 Of whom men, % Of whom women, % North America USA 3,053 70 30 3,250 71 29 3,211 71 29 Canada 593 39 61 404 50 50 336 58 42 TOTAL NORTH AMERICA 3,646 65 35 3,654 69 31 3,547 70 30 Latin America Mexico 3,939 63 37 3,830 64 36 3,574 66 34 Colombia 3,426 68 32 3,386 69 31 3,413 69 31 Ecuador 928 70 30 959 71 29 979 72 28 Brazil 493 55 45 494 55 45 494 54 46 Chile 434 67 33 462 71 29 470 71 29 Argentina 321 63 37 312 62 38 310 63 37 Dominican Republic 247 68 32 260 67 33 257 68 32 Peru 136 46 54 136 46 54 135 49 51 Costa Rica 101 51 49 98 54 46 98 55 45 Rest of Latin America 67 51 49 60 42 58 56 41 59 TOTAL LATIN AMERICA 10,092 65 35 9,997 66 34 9,786 67 33 Asia China 1,945 59 41 10,094 59 41 10,050 58 42 India 313 90 10 316 91 9 318 91 9 Malaysia 271 46 54 1,394 47 53 1,407 45 55 Pakistan 201 76 24 218 76 24 227 74 26 Indonesia 146 64 36 155 65 35 156 64 36 Japan 92 44 56 108 46 54 114 44 56 Singapore 12 34 66 41 31 69 40 30 70 Rest of Asia 145 48 52 361 53 47 356 54 46 TOTAL ASIA 3,125 61 39 12,687 58 42 12,668 57 43 Rest of the world Australia 426 51 49 419 51 49 391 53 47 South Africa 373 38 62 365 41 59 385 43 57 New Zealand 292 77 23 317 73 27 316 71 29 Fiji 89 78 22 86 77 23 86 78 22 Other Rest of the world 1 100 – 1 100 – 1 100 – TOTAL REST OF THE WORLD 1,181 55 45 1,188 55 45 1,179 56 44 Total Group 35,885 67 33 45,900 65 35 45,563 65 35 1) Within the framework of Essity’s employee data there are four ways to stipulate gender identity: woman, man, nonbinary and gendernotdeclared. The percentage of employees in the latter two response alternatives constitute a nonmaterial share, which is why these groups are not reported separately. The average number of employees is calculated as an average over five quarters. 2) The average number of employees for the comparative year 2023 has been corrected. B2b. Segment reporting, cont. Contents 140Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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B3. Operating expenses Accounting principles AP Cost of goods sold includes the costs of production, purchase and distribution of goods sold, i.e. mainly the costs of raw materials, consumables, energy, repairs and maintenance, depreciation, amortization and impairment, storage, transport and production and distribution personnel. Sales, general and administration mainly includes costs for marketing, research and development, depreciation and amortization, and research and development, sales and administrative personnel. Items affecting comparability include costs in connection with acquisitions, restructuring, impairment and other specific events that are relevant when comparing earnings for one period with those of another. Operating expenses by function and type of cost Operating expenses by function SEKm 2024 2023 2022 Cost of goods sold IS –97,929 –102,627 –97,395 Sales, general and administration IS –27,351 –25,661 –21,916 Share of results of associates and joint ventures IS 78 39 38 Amortization of acquisitionrelated intangible assets IS –1,110 –1,109 –1,111 Items affecting comparability IS TB3:1 –939 –2,641 –2,445 Total –127,251 –131,999 –122,829 Refer also to the Description of costs section on page 187. Operating expenses by type of cost SEKm Note 2024 2023 2022 Other income TB3:2 1,824 1,753 1,411 Change in inventory of finished products and products in progress1) –1,890 –2,634 516 Raw materials and consumables1) –46,087 –49,270 –52,484 Personnel costs1) C1 –28,684 –28,257 –25,089 Other operating expenses1) TB3:3 –44,987 –45,108 –38,208 Amortization of intangible assets1) D1 –1,464 –1,436 –1,362 Depreciation of property, plant and equipment1) D2, G1 –5,763 –5,734 –5,476 Impairment of intangible assets1) D1 –72 –356 –305 Impairment of property, plant and equipment1) D2, G1 –370 –590 –1,868 Reversal of impairment of property, plant and equipment1) D2, G1 164 118 – Share in profits of associates and joint ventures F2 78 39 38 Gain/loss on divestment and liquidation1) 2) F4 – –524 –2 Total –127,251 –131,999 –122,829 1) Including items affecting comparability. 2) Including reversal of realized translation differences in divested companies to profit or loss. Items affecting comparability TB3:1 Distribution of items affecting comparability by type of cost SEKm 2024 2023 2022 Impairment of inventory of finished products and products in progress, net –77 –167 –83 Personnel costs –219 –582 –97 Other operating expenses –421 –605 –131 Impairment of intangible assets, net –70 –350 –305 Impairment of property, plant and equipment, net –152 –413 –1,827 Gain/loss on divestment and liquidation – –524 –2 Total –939 –2,641 –2,445 Distribution of items affecting comparability SEKm 2024 Costs for restructuring measures –637 Costs in conjunction with fires in Italy and the USA –184 Impairment losses Goodwill –70 Other –48 Total –939 Distribution of items affecting comparability, previous periods SEKm 2023 Costs for restructuring measures –1,948 Net loss, divestments in Russia and New Zealand –524 Transaction costs related to divestments –77 Other –92 Total –2,641 Distribution of items affecting comparability, previous periods SEKm 2022 Impairment of assets in Russia –1,718 Costs for restructuring measures –592 Transaction costs related to acquisitions –69 Other –66 Total –2,445 Other income TB3:2 SEKm 2024 2023 2022 Sales not included in core operations 1,824 1,753 1,411 Total 1,824 1,753 1,411 Other income includes rental income, which is recognized in the period covered by the rental contract, and similar items, which are recognized in accordance with the implied financial effect of the contract. Contents 141Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Distribution of other operating expenses TB3:3 SEKm 2024 2023 2022 Transport expenses –10,941 –11,142 –11,143 Energy costs1) –6,895 –8,809 –7,972 Marketing costs –7,518 –6,898 –5,722 Repairs and maintenance –4,144 –3,943 –3,279 IT, telephony and lease of premises –1,533 –1,327 –1,005 Other operating expenses, production –6,945 –6,752 –4,776 Other operating expenses, distribution, sales and administration –6,502 –5,773 –4,123 Other –509 –464 –188 Total –44,987 –45,108 –38,208 1) After deduction for revenues from energy in the amount of SEK 300m (167; 704). Other disclosures Exchange rate effects had a negative impact of SEK –91m (–197; –60) on operating profit. Other disclosures1) SEKm 2024 2023 2022 Government grants received 77 232 620 Research and development2) –1,852 –1,704 –1,622 1) These items are included in the tables above under the respective type of cost. 2) Represents Sales, general and administration in its entirety. B3. Operating expenses, cont. B4. Auditing expenses Auditing expenses SEKm 2024 2023 2022 Ernst & Young Audit assignments –103 –91 –72 Auditing activities other than the audit assignment –4 –2 –2 Tax consultancy services –1 –1 –1 Other assignments –3 –4 –9 Total Ernst & Young –111 –98 –84 Other auditors Audit assignments –2 –15 –15 Tax consultancy services –2 –3 –12 Other assignments 0 –2 –14 Total other auditors –4 –20 –41 Total –115 –118 –125 Of which, discontinued operations; other auditors – –16 –17 Of which, continuing operations –115 –102 –108 B5. Income taxes Accounting principles AP The Group’s tax expense comprises current tax and deferred tax. The recognition of tax effects is determined by the manner in which the underlying transaction is recognized. For items in profit or loss, the tax effect is recognized in profit or loss, with the same applying for transactions in other com prehensive income within equity, whereby the tax effect is subsequently recognized in other comprehensive income. Current tax is calculated on the tax rules prevailing in the countries where the Group operates. Taxation at source on intraGroup transactions and interest attributable to income tax are recognized as current income tax. Deferred tax is calculated based on temporary differences between the carrying amounts and the tax base values of assets and liabilities and for tax loss carryforwards and other unutilized tax deductions where it is probable that these can be utilized against future taxable profits. Deferred taxes are measured in the balance sheet at their nominal amount and based on the tax rates enacted or substantively enacted on the balance sheet date. Essity does not recognize any deferred tax liability regarding temporary differences on undistributed earnings from shares in subsidiaries, joint v entures or associates, since Essity can control the reversal of the temporary differences and it is probable that such a reversal will not take place in the foreseeable future. Essity has applied the mandatory exemption to recognize and disclose information on deferred tax assets and deferred tax liabilities arising from income taxes under Pillar 2. Tax liabilities and tax assets are recognized net when Essity has a legal right to offset. OECD Pillar 2 model rules Essity is subject to OECD’s model rules for Pillar 2. Pillar 2 applies to multinational groups with sales of more than EUR 750m and the framework aims to ensure that profits in each jurisdiction where the Group operates are taxed at a rate of at least 15%. On December 13, 2023, Sweden – the jurisdiction where the Parent company Essity AB is located – intro duced legislation on topup tax for companies in large groups. This legislation entered into force on January 1, 2024. Under this law, the Group is obliged to pay a topup tax on the profits of its subsidiaries that are taxed at an effective tax rate of less than 15%. Essity has performed a preliminary assessment of its potential exposure to Pillar 2 income taxes based on the temporary safe harbor rules. By applying the temporary safe harbor rules, multinational groups operating in lowrisk countries can reduce the administrative burden for a transitional period of three years. The preliminary assessment is based on the latest available information on the financial position of the entities within the Group, which are consolidated financial statements up to the fourth quarter of the 2024 fiscal year. The assessment shows that only one jurisdiction, Switzerland, cannot benefit from the temporary safe harbor rules. For this jurisdiction, a potential topup tax has been calculated based on full Pillar 2 rules and the topup tax is expected to amount to SEK 15m. Income tax of SEK 15m (2023: not applicable) related to Pillar 2 is therefore included in the consolidated income statement for 2024. Key assessments and assumptions KAA To determine the value of current and deferred tax assets and tax liabilities on the balance sheet date, it is necessary to make certain assessments and assumptions. Given that Essity operates globally, the company monitors future changes to tax legislation in addition to the development of the business climate in many countries. These factors could impact the company’s future taxable profits and thus its possibility to utilize deferred tax assets on loss carryforwards, tax credits and other temporary differences. Furthermore, Essity evaluates tax assets and tax liabilities on a regular basis. If it is deemed probable that a chosen tax position will not be accepted by a tax authority or court, the tax liability is adjusted in accordance with the presumed outcome. Accordingly, a changed assessment of the probability of future taxable profits, or the probability that a tax authority or court will accept a chosen tax position, could have a positive or negative effect. The actual outcome may differ from the assessment that Essity has made. Contents 142Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Tax expense Tax expense (+), tax income (–) SEKm 2024 % 2023 % 2022 % Current tax Income tax for the period1) 4,970 30.4 3,957 30.9 2,297 32.0 Adjustments for prior periods –177 –1.1 117 0.9 –204 –2.8 Current tax expense TB5:1 4,793 29.3 4,074 31.8 2,093 29.2 Deferred tax Changes in temporary differences –414 –2.5 –629 –4.9 –47 –0.6 Adjustments for prior periods –65 –0.4 –187 –1.4 –50 –0.7 Revaluations 17 0.1 17 0.1 10 0.1 Deferred tax expense TB5:1 TB5:2 TB5:3 –462 –2.8 –799 –6.2 –87 –1.2 Tax expense IS 4,331 26.5 3,275 25.6 2,006 28.0 1) Includes topup tax in Switzerland related to Pillar 2 of SEK 15m. Explanation of tax expense The difference between the recognized tax expense and expected tax expense is explained below. The expected tax expense is calculated based on profit before tax in each country multiplied by the statutory tax rate in the country. Tax expense SEKm 2024 % 2023 % 2022 % Profit before tax, continuing operations IS 16,364 12,792 7,171 Profit before tax from discontinued operations 245 295 937 Profit before tax 16,609 13,087 8,108 Expected tax expense 4,026 24.2 2,877 22.0 1,857 22.9 Permanent differences between accounting and taxable result Effects of subsidiary financing1) 25 0.1 33 0.2 63 0.8 Effects of acquisitions and divestments2) –6 0.0 162 1.2 3 0.0 Taxes relating to profittaking3) 61 0.4 63 0.5 29 0.4 Other permanent effects4) 411 2.5 194 1.5 338 4.2 Taxes related to prior periods5) –169 –1.0 –55 –0.4 –331 –4.1 Changes in the value of deferred tax assets6) –1 0.0 5 0.0 74 0.9 Changes in tax rates7) 12 0.1 12 0.1 11 0.1 Total effective tax expense 4,359 26.3 3,291 25.1 2,044 25.2 Tax expense, continuing operations IS 4,331 26.5 3,275 25.6 2,006 28.0 Tax expense, discontinued operations 28 16 38 1) The effects are principally attributable to financing of the operation in Germany. 2) Effects of acquisitions and divestments in 2023 relate to the divestment of Russian operations of SEK 162m. 3) Mainly attributable to taxation at source on profittaking to the Netherlands from Canada of SEK 32m. The year 2023 mainly attributable to taxation at source on profittaking to Colombia from Ecuador of SEK 46m. The year 2022 is mainly attributable to taxation at source on profittaking to the Netherlands, Germany and Sweden from Colombia of SEK 17m. 4) Other permanent effects are mainly attributable to permanent taxable effect from internal restructuring of SEK 324m, nondeductible taxation at source on royalties and services of SEK 99m, and topup tax in Switzerland of SEK 15m. The year 2023 is mainly attributable to effects of state taxation in the USA of SEK 118m and the permanent tax impact from internal restructuring of SEK 75m. The year 2022 primarily comprises nondeductible impairment of assets in Russia of SEK 357m. 5) Taxes attributable to earlier periods relate mainly to reduced costs for tax audits of SEK –214m and impairment of tax assets in Sweden of SEK 71m. The year 2023 relates mainly to adjustment of BEAT of SEK 76m and adjustment of capitalized R&D costs and loss carryforwards of SEK –105m in the USA. The year 2022 relates mainly to offsetting of taxation at source in the Netherlands of SEK –115m, additional deduction for R&D expenses and remeasurement of deferred tax assets in Vinda of SEK –77m and remeasurement of the tax amount on noncurrent assets in Mexico of SEK –72m. 6) The change in value of deferred tax assets for 2022 relates to noncapitalized loss carryforwards in Brazil of SEK 43m. 7) Relates mainly to the revaluation of a deferred tax liability in the USA of SEK 20m compared with SEK 9m in 2023. In year 2022 relates mainly to the revaluation of a deferred tax liability in the UK of SEK 26m and a deferred tax asset in Vinda of SEK –11m. Current tax liability Current tax liability (+), current tax asset (–) SEKm 2024 2023 2022 Value, January 1 876 437 624 Current tax expense TB5:1 4,793 4,074 2,237 Liabilities directly attributable to assets held for sale – –24 – Paid tax OCF CF TB5:1 –5,860 –3,615 –2,426 Other changes from acquisitions, divestments and reclassifications –5 25 –85 Translation differences –35 –21 87 Value, December 31 –231 876 437 of which current tax liability BS 1,442 2,165 1,589 of which current tax asset BS 1,673 1,289 1,152 Tax by country TB5:1 Tax expense (+), tax income (–) Tax payments made by entities in different countries, paid tax (–), SEKm Country Current tax expense Deferred tax expense Total tax expense Paid tax USA 698 –16 682 –784 Mexico 661 –177 484 –634 Sweden 337 37 374 –543 Germany 387 –34 353 –845 France 312 –3 309 –342 Colombia 322 –14 308 –352 Spain 155 64 219 –114 Netherlands 248 –31 217 –705 Italy 175 14 189 –129 Austria 115 3 118 –154 Poland 80 37 117 –89 Belgium 100 –7 93 –89 UK 172 –81 91 –66 Finland 77 1 78 –86 Slovakia 76 2 78 –104 Switzerland 71 0 71 –62 Denmark 68 0 68 –68 Norway 58 0 58 –38 Peru 57 –2 55 –56 Ecuador 55 –2 53 –111 Egypt 47 0 47 –13 Canada 114 –73 41 –102 Czech Republic 36 0 36 –37 Hungary 27 2 29 –27 Indonesia 33 –5 28 –17 Chile 26 2 28 –39 Other countries1) 286 –179 107 –254 Total OCF CF IS 4,793 –462 4,331 –5,860 1) Other countries comprise several countries where the tax expense and tax payments for the respective countries are of a low amount. B5. Income taxes, cont. Contents 143Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Deferred tax liability TB5:2 Deferred tax liability (+), deferred tax asset (–) SEKm Value, January 1 Deferred tax expense Other changes2) Translation differences Value at December 31 Intangible assets 5,478 –538 –42 207 5,105 Property, plant and equipment 2,940 224 25 202 3,391 Financial noncurrent assets 785 177 44 1 1,007 Current assets –316 –16 42 –17 –307 Provisions –1,035 –76 –47 –21 –1,179 Liabilities –2,150 –227 138 26 –2,213 Tax credits and tax loss carryforwards –1,250 –17 0 –33 –1,300 Other 140 11 –1 –2 148 Total1) 4,592 –462 159 363 4,652 1) The net closing deferred tax liability comprises BS deferred tax assets of SEK 2,326m (2,343; 2,545) and BS deferred tax liabilities of SEK 6,978m (6,935; 8,718). 2) Other changes mainly include deferred tax recognized directly in other comprehensive income within equity according to IAS 19 Employee Benefits of SEK –34m and IFRS 9 Financial instruments of SEK –118m, in addition to effects from acquisitions and divestments of SEK –6m. Preceding periods’ deferred tax liability (+), deferred tax asset (–), SEKm TB5:3 YEAR Value, January 1 Liabilities directly attributable to assets held for sale Deferred tax expense Other changes Translation differences Value at December 31 2023 BS 6,173 –136 –799 –440 –206 4,592 2022 5,562 – –192 386 417 6,173 Tax loss carryforwards Tax credits and tax loss carryforwards for which deferred tax assets were recognized have been reported at the tax amount on the line Tax credits and tax loss carryforwards in TB5:2 in the amount of SEK –1,300m. Loss carryforwards for which no deferred tax assets were recognized amounted to SEK 4,768m (5,071; 5,051) at December 31, 2024. The change in unrecognized tax loss carryforwards for the period includes SEK –92m in exchange rate effects, SEK –103m that has expired and SEK –108m that was either utilized or capitalized. The tax value of noncapitalized tax loss carryforwards amounted to SEK 1,345m (1,438; 1,430). The useful lives of these tax loss carryforwards are distributed as follows: Loss carryforwards for which no deferred tax assets were recognized, SEKm Year of maturity 2024 2023 2022 Within 1 year – 74 3 2 years 8 – 6 3 years 8 7 9 4 years – 7 – 5 years or more 59 51 446 Indefinite useful life 4,693 4,932 4,587 Total 4,768 5,071 5,051 B5. Income taxes, cont. Contents 144Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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C. Employees C1. Personnel costs The tables below present the Group’s personnel costs for continuing operations and the Group’s personnel costs total operations. Information concerning the average number of employees by country is presented in Note B2b on page 137. Personnel costs, continuing operations TC2:1 SEKm Note 2024 2023 2022 Salaries and remuneration –20,902 –20,465 –17,483 of which Executive Management Team C2 –191 –144 –171 of which Board of Directors C3 –11 –12 –12 Pension costs –1,475 –1,415 –1,453 of which defined benefit pension costs C4 –361 –316 –380 of which other pension costs –1,114 –1,099 –1,073 Other social security costs –4,017 –4,535 –4,510 Other personnel costs –2,290 –1,842 –1,643 Total1) –28,684 –28,257 –25,089 1) Of which items affecting comparability of SEK –219m (–582; –97). Personnel costs, total operations TC2:1 SEKm Note 2024 2023 2022 Salaries and remuneration –21,344 –22,733 –19,506 of which Executive Management Team C2 –191 –144 –171 of which Board of Directors C3 –11 –12 –12 Pension costs –1,523 –1,660 –1,627 of which defined benefit pension costs C4 –361 –318 –381 of which other pension costs –1,162 –1,342 –1,246 Other social security costs –4,049 –4,704 –4,706 Other personnel costs –2,362 –2,210 –2,031 Total1) –29,278 –31,307 –27,870 1) Of which items affecting comparability of SEK –219m (–582; –97). C2. Remuneration of senior executives Accounting principles AP Incentive programs Essity has the following remuneration programs: Short Term Incentive (STI) and Long Term Incentive (LTI). Variable remuneration is capped at a specific percentage of fixed salary and is recognized as an expense and noncurrent provi sion, respectively, during the earning period in accordance with IAS 19 Employee Benefits. The programs are continu ously evaluated and reported in the annual accounts. Payment is made in cash the year following the vesting period. Description of incentive programs The STI program consist of financial targets and nonfinancial targets that support the achievement of financial targets. Typically targets consist of operating cash flow, cost efficiency, EBITA margin, organic sales growth and consolidated profit before tax, as well as innovation goals. Essity has adopted a longterm incentive program to enable the company to recruit and retain key individuals and to promote the common interest of participants and shareholders in generating longterm returns. The LTI program consist of two goals. The first goal is based on the performance of the company’s Class B share, mea sured as TSR (Total Shareholder Return) compared with a weighted TSR index of competing companies with operations in Essity’s business areas of Consumer Goods, Health & Medical and Professional Hygiene over a threeyear period, where the performance target is higher TSR for the company than the index for the benchmark group (maximum out come requires a 5% better outcome than index for the benchmark group). The second goal is a relative goal for reduc tion in carbon emissions. For maximum outcome, a reduction of 7.5% on a linear basis in carbon emissions is required compared with the estimated target that applied in the year immediately preceding the start of the measurement period. Variable remuneration under LTI is paid in cash to employees and accordingly does not have any dilutive effect. Senior executives who participate in the LTI program are required to purchase shares in Essity for the entire amount of the LTI outcome after tax and must not divest these shares for a period of three years. Annual General Meeting guidelines for remuneration of senior executives These guidelines shall govern remuneration to directors, the President, Executive Vice President and other members of the executive team (below referred to as “senior executives”). The guidelines do not include remuneration decided upon by the General Meeting. Remuneration principles Successful implementation of the company’s business strategy and the fostering of the company’s longterm interests, including its sustainability, require that the company is able, through competitive remuneration on market terms, to recruit, incentivize and retain skilled employees. The total remuneration package must therefore be on market terms and competitive on the executive’s field of profession, and must be related to the executive’s responsibilities, powers and performance. The remuneration may comprise fixed salary, short and longterm variable remuneration, other benefits and pension. The company’s business strategy is described in the Annual Report. Variable remuneration Variable remuneration shall be based on results relative to short and longterm targets for Essity’s incentive program, which shall contribute to the fulfilment of the objectives established by the company or to the performance of the company’s share. Remuneration shall be aimed at promoting the company’s business strategy and longterm interests, including its sustainability. Furthermore, variable remuneration shall be paid as cash remuneration and shall not be included in the basis for pension computation. The shortterm element shall not exceed 100% of annual fixed salary and the longterm element shall not exceed 100% of annual fixed salary. The maximum variable remuneration level shall be determined per individual, taking into account the total remuneration in relation to the specific role, the local market, the terms of employment or the individual performance. Shortterm performance targets shall include either organic growth, product development, earnings, cash flow, capi tal efficiency, return or individual targets or a combination thereof. Longterm performance targets shall include either sustainability, total shareholder return (TSR) or a combination thereof and – in order to create a longterm perspective – be combined with requirements for senior executives to use the compensation net of tax to invest in the Essity share with a minimum holding period of three years. The company shall have the possibility to withhold payment of variable remuneration where necessary and possible according to law, provided there are special reasons for so doing and such a measure is necessary to meet the com pany’s longterm interests, including its sustainability. Furthermore, the company shall have the possibility provided by law to demand repayment of any variable remuneration paid based on erroneous grounds. Pension and other benefits Pension benefits shall be defined contribution, and the annual premium shall not exceed 40% of the fixed annual salary. Other, lesser benefits may include medical insurance, company car, fitness allowance as well as membership and service fees, training/education and other support. A notice of termination period of not more than two years shall apply upon termination of the employment relation ship where the termination is initiated by the company, and of not more than one year where the termination is initiated by the executive. Severance pay should not exist. Contents 145Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Decision-making process and reporting Matters relating to remuneration of senior executives shall be addressed by the Board’s Remuneration Committee and, with respect to the President, decided upon by the Board. The duties of the Remuneration Committee shall also include preparing board decisions regarding proposals for guidelines for remuneration of senior executives, performing over sight as well as monitoring and assessing the application thereof. When the Board or the Remuneration Committee addresses and decides on remunerationrelated matters, senior executives may not be present insofar as the matter relates to them. With respect to the calculation of variable remuneration, an audit certificate must be obtained before any decision is taken regarding payment. In the preparation of the remuneration guidelines, consideration has been given to salary and employment conditions for the company’s other employees, such as information regarding total remuneration, components of the remuneration as well as the increase in remuneration and the rate of increase over time, and the company’s equality of opportunity policy. The Board shall prepare a remuneration report. Application of, and deviation from, the guidelines The Board may decide to temporarily deviate from the guidelines, wholly or in part, if there are special reasons for so doing in an individual case and deviation is necessary to satisfy the company’s longterm interests, including its sustain ability. The duties of the Remuneration Committee include preparing board decisions on remuneration issues, including decisions regarding deviations from the guidelines. With respect to employment relationships governed by rules other than Swedish rules, appropriate adjustments shall take place with respect to pension benefits and other benefits to ensure compliance with such rules or local practice, whereupon the overarching purpose of these guidelines shall be attained as far as possible. The guidelines shall not take precedence over mandatory terms or employment law legislation or collective agree ments. Nor shall they apply to already executed agreements. Description of significant changes compared to previous guidelines The changes are only editorial and are proposed for clarification purposes.These guidelines shall apply from the Annual General Meeting until further notice. Company’s application of guidelines The company applied the guidelines approved by the AGM in the following manner. Fixed salary The fixed salary is to be in proportion to the individual’s position and the authority and responsibilities this entails, as well as performance. It is set individually at a level that, combined with other remuneration, is assessed as a market rate and competitive in the labor market in which the executive works. Variable remuneration Variable remuneration of the CEO and Executive Vice President is maximized to a total of 100% of the fixed salary. For the Business and Global Unit Presidents the maximum outcome is 100% –130%. The corresponding limit for other senior executives is 50%–100%. The program for variable remuneration is divided into shortterm and longterm portions. The shortterm portion (“Short Term Incentive”, or “STI”) for the CEO and the Executive Vice President may amount to a maxi mum of 50% of fixed salary. For the Business and Global Unit Presidents, the maximum outcome is 50%–80% of the fixed salary, while the corresponding limit for other senior executives is 50%. For one Executive in sweden the STI pro gram has been replaced by a fixed annual allowance. The STI targets set for the Business Unit Presidents are mainly based on organic sales growth, EBITA margin and operating cash flow for each business unit and Groupwide cash flow, return on capital and innovation targets. The targets for the CEO and senior executives within the global units and central functions is are based primarily on the group’s organic sales growth,return on capital, operating cash flow, and profit. Furthermore, for certain senior execu tives, targets for strategic projects and innovation also apply, accounting for 10%–20% of the STI as part of variable remuneration. The longterm portion (“Long Term Incentive”, or LTI) of the program may amount to a maximum of 50% of the fixed salary. The TSR target accounts for a maximum of 80% of the LTI as part of variable pay. The sustainability target, Science Based Targets Scope 1 and 2, which aims to reduce emissions of carbon dioxide in energy utilization and purchased electricity, accounts for a maximum of 20% of the variable remuneration.The senior executive is to invest all of the variable LTI compensation, after tax withholdings, in Essity shares. The shares may then not be sold before the end of the third year after the purchase of shares in the relevant LTI program. Outcome, variable remuneration For the CEO, Executive Vice President and the heads of the central functions, STI resulted in 48.2% of fixed salary for 2024. STI resulted in variable remuneration corresponding to 45.5–80.0% of fixed salary for the Business Unit and Global Unit Presidents. The outcome for all senior executives from the LTI program amounted to 50% of fixed salary. Based on 2024 salaries of 13 senior executives, the maximum outcome of variable remuneration would result in a cost for the Group, excluding social security costs, of approximately SEK 96,0m. Other benefits Other benefits consist of, in some cases, to a company car, commuter reimbursement and health insurance. Pension The CEO has a defined contribution pension based on an annual payment, to be paid by the company, amounting to 40% of the employee’s fixed salary, in addition to the agreed contribution for the basic pension benefits in the ITP plan (supplementary pensions for salaried employees), with retirement pension benefits limited to a maximum salary income of 7.5 income base amounts. Six other executives are covered by corresponding defined contribution pension benefits with an annual premium of approximately 30–40% and pension age of 65. One senior executive in Sweden has a com bined defined benefit and defined contribution plan. Five senior executives that are employed in companies outside Sweden are encompassed by defined contribution pension plans on local marketbased terms. Notice period and severance pay The agreement with the CEO stipulates a period of notice of termination of two years if such notice is given by the com pany. The CEO has a corresponding right with a period of termination of one year. If notice is given by the company, the CEO is not obligated to serve during the notice period. The agreement has no stipulations with regard to severance pay. Between the company and other senior executives, a period of notice of termination of one to two years normally applies, if such notice is given by the company. The executive has a corresponding right with a period of notice of termi nation of six months to one year. The executive is normally expected to be available to the company during the notice period. The agreements have no stipulations with regard to severance pay. Preparation and decision process for remuneration During the year, the Remuneration Committee submitted recommendations to the Board regarding the principles for remuneration of senior executives. The recommendations encompassed the ratio between fixed and variable remuner ation and the size of any salary increases. In addition, the Remuneration Committee expressed an opinion on the criteria for assessing variable remuneration and pension terms. The Board discussed the Remuneration Committee’s proposal and decided on the basis of the Committee’s recommendations. The remuneration of corporate management for the fiscal year was based on the Remuneration Committee’s recommendation and, with regard to the CEO, decided by the Board. The executives concerned did not participate in remuneration matters pertaining to themselves. When it was deemed appropriate, the work of the Remuneration Committee was carried out with the support of external expertise. C2. 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C2. Remuneration of senior executives, cont. Remuneration and other benefits during the year 2024 TC2:1 SEK Fixed salary Variable remuneration1) Other benefits Total salaries and remuneration President and CEO Magnus Groth 17,500,000 17,180,9312) 192,894 34,873,825 Other senior executives (12 people) 72,827, 316 76,533,4123) 7,047,255 156,407,983 Total 90,327,316 93,714,343 7,240,149 191,281,808 1) Variable remuneration covers the 2024 fiscal year but is paid in 2025. 2) Of which LTI program SEK 8,750,000. 3) Of which LTI program SEK 36,588,842. Pension costs 20241) SEK President and CEO Magnus Groth2) 7,302,869 Other senior executives (12 people)3) 28,392,266 Total 35,695,135 1) The pension costs pertain to the costs that affected profit for 2024, excluding special payroll tax. 2) Outstanding pension obligations amount to SEK 22,076,312. 3) Outstanding pension obligations amount to SEK 90,348,333. Remuneration and other benefits during the year 2023 TC2:1 SEK Fixed salary Variable remuneration1) Other benefits Total salaries and remuneration President and CEO Magnus Groth 17,000,000 11,018,626 2) 150,979 28,169,605 Other senior executives (13 people) 65,135,658 48,807,880 3) 2,581,682 116,525,220 Total 82,135,658 59,826,506 2,732,661 144,694,825 1) Variable remuneration covers the 2023 fiscal year but is paid in 2024. 2) Of which LTI program SEK 0, BIP program SEK 5,108,500. 3) Of which LTI program SEK 0, BIP program SEK 19,573,265. Pension costs 20231) SEK President and CEO Magnus Groth2) 7,095,675 Other senior executives (13 people)3) 15,670,674 Total 22,766,349 1) The pension costs pertain to the costs that affected profit for 2023, excluding special payroll tax. 2) Outstanding pension obligations amount to SEK 20,659,029. 3) Outstanding pension obligations amount to SEK 80,762,166. Remuneration and other benefits during the year 2022 TC2:1 SEK Fixed salary Variable remuneration1) Other benefits Total salaries and remuneration President and CEO Magnus Groth 16,500,000 14,692,4252) 136,022 31,328,447 Other senior executives (12 people) 69,449,581 66,171,1953) 4,311,376 139,932,152 Total 85,949,581 80,863,620 4,447,398 171,260,599 1) Variable remuneration covers the 2022 fiscal year but is paid in 2023. 2) Of which LTI program SEK 0, BIP program SEK 7,663,425. 3) Of which LTI program SEK 0, BIP program SEK 32,255,857. Pension costs 20221) SEK President and CEO Magnus Groth2) 6,876,833 Other senior executives (12 people)3) 19,545,865 Total 26,422,698 1) The pension costs pertain to the costs that affected profit for 2022, excluding special payroll tax. 2) Outstanding pension obligations amount to SEK 17,081,864. 3) Outstanding pension obligations amount to SEK 66,379,956. Outcome of the long-term incentive program 2022–2024 for the President and CEO and other senior executives SEK Target Target’s relative weight(%) Target out- come (%) Remuneration President and CEO Magnus Groth Total Shareholder Return (TSR) 40 40 7,000,000 Sciencebased targets, Scope 1 and 2 10 10 1,750,000 Other senior executives (12 people) Total Shareholder Return (TSR) 40 40 29,275,801 Sciencebased targets, Scope 1 and 2 10 10 7,318,950 Annual total remuneration ratio of the President and CEO to the median annual total remuneration for all employees (excluding the President and CEO) SEKm Total remuneration1) 2024 Magnus Groth, President and CEO 42,17 Median total remuneration excluding the President and CEO2) 0,46 Annual Total Remuneration Ratio 92 1) Total Remuneration was calculated as all payments made to the employee through the payroll system including pension contributions, variable remuneration covers the 2024 fiscal year but is paid in 2025. 2) The total remuneration of the median employee of all employees recorded in the HRIS system. The table shows the total remuneration for the President and CEO divided by the total remuneration of the median employee. For 2024, the median employee is selected from all employees captured in the global HR platform. In previ ous Annual Reports, the total remuneration of the President and CEO was compared to the average total remuneration for employees in Essity Aktiebolag (publ) excluding senior executives. The change in the remuneration ratio for 2024 in comparison to 2023 is mainly due to the updated methodology used to identify the median employee. Obligations in relation to former presidents and CEOs For former presidents and CEOs, Essity has outstanding, nonfunded obligations amounting to SEK 97m. These costs were recognized in previous years and comprise pension obligations that Essity assumed from Svenska Cellulosa Aktiebolaget in conjunction with the split of the Group. 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C4. Remuneration after completion of employment Accounting principles AP Defined benefit pension plans Defined benefit pension plans are characterized by the fact that payment is based on the period of employment and the employee’s salary at, or just prior to, retirement. The actuarial and investmentrelated risks associated with defined bene fit pension plans are carried by the company. The defined benefit obligations are calculated annually by independent actuaries using the Projected Unit Credit Method. Calculations are based on actuarial assumptions. Actuarial assumptions comprise the company’s best assess ment of the variables that determine the final cost for providing the benefits. The obligation is measured at the present value of the anticipated future cash flows using a discount rate (see Key assessments and assumptions below). Actuarial gains and losses (remeasurements) are recognized directly in equity under other comprehensive income in the period in which they arise. The recognized cost for the defined benefit plans includes personnel costs, as well as net interest items. Net interest items comprise the discount rate calculated on the average net pension liability for the period, taking fee and remuneration payments into consideration. The difference between the calculated interest income (discount rate) on the plan assets and Essity’s actual return on the plan assets is included in the remeasurement of the defined benefit net liability or net asset recognized in equity under other comprehensive income. Past service costs are recog nized in profit or loss in the period in which they arise. The liability recognized in the balance sheet for defined benefit pension plans is the present value of the obligation on the balance sheet date minus the fair value of the plan assets. Funded plans with net assets, meaning plans with assets exceeding obligations, are recognized as a financial noncurrent asset provided they are not limited by the “asset ceiling” under IAS 19. Other pension plans, which are not fully funded or unfunded, are recognized as Provisions for pensions. In certain countries, pension payments are subject to taxes or fees. In such cases, these are included in the calcula tion of the obligation for the defined benefit pension plans. These taxes or fees are recognized as an expense in profit or loss, except in cases where they are attributable to actuarial gains or losses, in which case they are recognized directly in equity under other comprehensive income. Defined contribution pension plans Plans where the employer’s obligation is limited to the premiums the company has undertaken to pay are classified as defined contribution plans. In these plans, it is the employee who bears the investment risk, meaning the risk that the invested assets could be insufficient to generate the anticipated compensation. The Group’s payments relating to defined contribution plans are recognized as an expense during the period the employees carry out the service to which the payment relates. Other post-retirement benefits Some Group companies provide postretirement healthcare benefits. The obligation and anticipated costs for these benefits have been calculated and recognized in a similar manner to the defined benefit pension plans. Severance pay Severance pay is recognized as a payroll expense when the Group has an obligation to compensate employees whose employment was terminated early. Key assessments and assumptions KAA The calculation of recognized expenses and provisions for defined benefit pension plans, where the size of the future compensation is unknown and payment will occur far in the future, is dependent on assumptions and assessments. Key assumptions and assessments include the discount rate, future salary increases, inflation and life expectancy. Essity determines the discount rate based primarily on AArated corporate bonds issued in the currency in which the pay ments will be made that match the duration of the obligations. If no such corporate bonds are available, government bonds or mortgage bonds are used. Inflation assumptions are based on a combination of central bank targets, implicit market expectations and longterm analyst forecasts. Assumptions regarding salary increases are based on market expectations and market research forecasts. Key actuarial assumptions are presented in TC4:5 . The sensitivity of the recognized provision with respect to key actuarial assumptions is described in TC4:6 . C3. Fees to board members in the Parent company Remuneration to nonexecutive Board members of Essity Aktiebolag (publ) refers to the fees approved at the AGM on March 21, 2024 for the period until the next AGM in March 2025. No remuneration is paid to the President and CEO and other employees. Board fee Audit Committee fee Remuneration Committee fee Portfolio Development Committee fee Total SEK 2024 2023 2022 2024 2023 2022 2024 2023 2022 20244) 2023 2022 2024 2023 2022 Jan Gurander (Chairman)1) 2,730,000 875,000 320,000 300,000 160,000 300,000 3,210,000 1,475,000 Pär Boman (Chairman)2) 2,625,000 2,550,000 300,000 290,000 155,000 150,000 300,000 290,000 3,380,000 3,280,000 Ewa Björling 910,000 875,000 850,000 320,000 300,000 290,000 1,230,000 1,175,000 1,140,000 Annemarie Gardshol 910,000 875,000 850,000 910,000 875,000 850,000 Björn Gulden 850,000 850,000 Maria Carell 910,000 875,000 910,000 875,000 Louise Svanberg 850,000 125,000 975,000 Bert Nordberg 910,000 875,000 850,000 135,000 130,000 125,000 425,000 415,000 1,495,000 1,430,000 1,390,000 Barbara Milian Thoralfsson 910,000 875,000 850,000 450,000 425,000 415,000 135,000 130,000 1,535,000 1,430,000 1,265,000 Torbjörn Lööf 910,000 875,000 850,000 300,000 290,000 1,230,000 1,175,000 1,140,000 Karl Åberg3) 910,000 320,000 1,230,000 Lars Rebien Sørensen 850,000 290,000 1,140,000 Total 9,100,000 8,750,000 9,350,000 1,410,000 1,325,000 995,000 430,000 415,000 400,000 1,325,000 1,285,000 11,750,000 11,815,000 12,030,000 1) Chairman from March 21, 2024. 2) Chairman until March 21, 2024. 3) Board member from March 21, 2024. 4) The committee ceased 2024. Contents 148Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Provisions for pensions and similar obligations SEKm 2024 2023 2022 Defined benefit obligations TC4:2 25,179 25,050 23,817 Fair value of plan assets TC4:3 –26,767 –28,632 –26,377 Effect of asset ceiling TC4:4 1,691 3,097 3,266 Provisions for pensions, net TC4:1 103 –485 706 Surpluses in funded plans recognized as financial noncurrent assets amounted to BS SEK 2,475m (3,072; 1,965) on the balance sheet date and provisions for pensions totaled BS SEK 2,578m (2,587; 2,671). Defined benefit obligations include obligations in an amount of SEK 2,503m (2,413; 2,272) pertaining to unfunded plans. Essity has both defined contribution and defined benefit pension plans in a number of Group companies. The most significant defined benefit pension plans in the respective countries are described below. Provisions for pensions and similar obligations per country TC4:1 SEKm Country Active Paid-up pension policies Pensioners Total obligation Plan assets, fair value Effect of asset ceiling Net Duration of obligation, years UK – 5,415 6,957 12,372 –12,649 297 20 14 Sweden 1,557 892 1,343 3,792 –4,677 1,394 509 16 Germany 1,955 502 1,669 4,126 –5,863 – –1,737 13 USA 189 836 2,199 3,224 –3,180 – 44 9 Other 1,357 3 305 1,665 –398 – 1,267 11 Total 5,058 7,648 12,473 25,179 –26,767 1,691 103 Costs for the period for defined benefit plans SEKm 2024 2023 2022 Current service cost, after deduction for premiums paid by the employees –339 –296 –421 Past service cost –9 –24 – Pensiontax expense –27 –26 –38 Remeasurement, net –13 4 43 Net interest income/expense –24 –66 –62 Pension costs before effects of settlements –412 –408 –478 Settlements – – –2 Pension costs after effects of settlements –412 –408 –480 UK The plan is a defined benefit plan with contributions paid by the company. The plan is based on final salary and consists of retirement pension, beneficiaries’ pension and disability pension. The plan was closed to new participants in July 2007 and closed for future accrual in September 2018. The plan is managed by an independent trust and assets are held separately, according to UK law. Surpluses in the pension fund remain in the fund’s assets. An asset ceiling has from 2021 been imposed on the surplus in the plan under the rules in IAS 19, since Essity is of the view that it will be unable to absorb the current surplus. The plan is obligated to meet the minimum funding level according to an agreement with the pension plan. In 2024, an insurance policy was taken out with an independent insurance company to reduce the risk of the pension obligation. The policy protects Essity from essentially all risks that may affect the size of the pension obligation. Sweden In Sweden, the defined benefit obligation is mainly covered by the ITP2 plan and executive pensions. The ITP2 plan (supplementary pensions for salaried employees) encompasses employees born before 1979 and is a defined benefit plan that provides retirement pension based on final salary, as a percentage of various salary intervals. The ITP2 plan is safeguarded by a fund, and the company may compensate itself using any surpluses in the plan assets. The pension plans for executives are largely retirement and beneficiaries’ pension plans based on final salary and are closed to new participants and the liability largely comprises paidup pension policies or pensions in payment. The pension plans for executives are largely unfunded and are creditinsured with PRI Pensionsgaranti. Germany In Germany, the defined benefit obligation comprises a number of different pension plans offering retirement pension, beneficiaries’ pension and disability pension. Plans based on final salary exist but these are closed to new participants and the benefit depends on the length of service and final salary at retirement. Defined contribution plans are also offered in which the benefit depends on provisions made by the company and, in certain plans, even by the employee during the period of service, and guaranteed return on the provisions. The obligations are largely financed by two different funds and the company may, in certain instances, compensate itself using any surpluses in the plan assets. USA In the USA, the defined benefit obligations comprise retirement pensions in which the premiums are paid by the com pany and the benefit is based on a standard amount per service year. Only one plan is still open for new accrual for about 200 employees. The benefits are financed via a pension fund that is obligated to meet the minimum legislated funding level. Surpluses in the pension fund can be utilized in the form of premium discounts. Defined benefit obligations TC4:2 SEKm 2024 2023 2022 Value, January 1 25,050 23,817 32,698 Less discontinued operations – –21 – Current service cost 345 302 424 Interest expense 1,107 1,136 557 Past service cost 9 24 – Pensiontax expense 27 26 38 Settlements and transfers 13 –2 –52 Benefits paid –1,290 –1,299 –1,349 Pension taxes paid 5 –10 –4 Remeasurement: financial assumptions –2,096 1,130 –9,606 Remeasurement: demographic assumptions –95 –50 –225 Remeasurement: experiencebased assumptions 578 48 48 Pension taxes pertaining to remeasurement –2 –41 –277 Translation differences 1,528 –10 1,565 Value, December 31 25,179 25,050 23,817 C4. Remuneration after completion of employment, cont. Contents 149Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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C4. Remuneration after completion of employment, cont. Remeasurements in the defined benefit obligations comprise changes in financial assumptions, such as changes to the discount rate, any changes in demographic assumptions and experiencebased deviations. Experiencebased devia tions include for example unexpectedly high or low employee turnover or salary increases. Plan assets TC4:3 SEKm 2024 2023 2022 Fair value, January 1 –28,632 –26,377 –35,249 Less discontinued operations – 12 – Interest income –1,190 –1,191 –572 Contributions by plan participants –6 –6 –2 Contributions by the employer 292 –330 –283 Benefits paid, excluding settlements 1,283 1,290 1,342 Benefits paid for settlements – – 10 Reclassification – – – Return in excess of recognized interest income 3,150 –2,086 9,951 Administrative expenses for pension obligations 45 38 37 Translation differences –1,709 18 –1,611 Fair value, December 31 –26,767 –28,632 –26,377 The plan assets are distributed according to the following classes of assets: 2024 2023 2022 Shares and mutual funds 35 38 39 Interestbearing securities 14 50 51 Properties 1 1 1 Insurance 47 – – Other 3 11 9 Total 100% 100% 100% At the balance sheet date 52% (99; 98) of the plan assets were traded on active markets for which market quotations were used for the valuation. 47% of the assets consist of an insurance policy for pension obligations in the UK measured at the value of the pension obligations covered by the insurance. As in the preceding year, no financial instruments issued by Essity are included in the fair value of plan assets at December 31, 2024. Effect of asset ceiling TC4:4 SEKm 2024 2023 2022 Value, January 1 3,097 3,266 5,261 Interest expense 107 121 77 Other changes to asset ceiling –1,628 –337 –2,190 Translation differences 115 47 118 Value, December 31 1,691 3,097 3,266 The value at the end of the period pertaining to the effect of the asset ceiling relates to funds in the UK pension plan amounting to SEK 297m (1,803; 2,271) and funds in one Swedish foundation that can be used for possible future undertakings for early retirement for certain categories of employees amounting to SEK 1,394m (1,294; 995). Principal actuarial assumptions TC4:5 Sweden UK Germany USA 2024 Discount rate 3.33 5.4 3.22 5.13 Expected salary increase rate 3.00 N/A 3.25 N/A Expected inflation 2.00 3.25 2.00 N/A Life expectancy, men1) 22 22 21 20 Life expectancy, women1) 24 25 24 21 2023 Discount rate 3.47 4.62 3.23 4.56 Expected salary increase rate 3.25 N/A 3.50 N/A Expected inflation 2.25 3.50 2.25 N/A Life expectancy, men1) 22 21 21 20 Life expectancy, women1) 24 25 24 21 2022 Discount rate 4.04 4.77 3.63 4.65 Expected salary increase rate 3.25 N/A 3.50 N/A Expected inflation 2.25 3.50 2.25 N/A Life expectancy, men1) 22 22 21 20 Life expectancy, women1) 24 25 24 21 1) Life expectancy, expressed in years, for an individual currently aged 65. The sensitivity of the defined benefit obligations with respect to changes in the principal actuarial assumptions is as follows: Change of obligation, increased obligation (–) TC4:6 SEKm Discount rate +0.25% 749 Price inflation, including salary inflation +0.25% –620 Life expectancy +1 year –856 The above sensitivity analysis is calculated by changing one assumption while the others remain constant. Multiemployer plans Essity has obligations for disability and family pensions for salaried employees in Sweden, secured through insurance with the insurance company Alecta. The company also has employees in Finland who are covered by the country’s statutory TyEL pension plan. These obligations are secured through the insurance company Varma. These benefits are reported as defined contribution plans, since there is no basis for allocating the obligations, plan assets and costs to the individual companies covered by the plan. Budgeted contributions The budgeted contributions for the Essity’s defined benefit pension plans for 2025 are calculated at SEK 526m. Contributions for multiemployer plans for 2025 are calculated at SEK 49m. Contents 150Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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D. Operating assets and liabilities D1. Goodwill and intangible assets Accounting principles AP Goodwill Goodwill arises in connection with business combinations where the consideration transferred exceeds the fair value of the acquired net assets. Goodwill is measured at cost less accumulated impairment. Goodwill is tested annually for impairment and when there is a possible impairment requirement. All goodwill is allocated to the cashgenerating units that are expected to benefit from the synergies from the business combination. In connection with the sale of Group companies, the remaining carrying amount of the goodwill attributable to the divested unit is included in the capital gain or loss. Goodwill that arises in acquisitions of associates or joint ventures is included in the carrying amount of the respective associate or joint venture. Intangible assets Trademarks Trademarks can only be recognized when they have been acquired through a separate transaction or through the acquisition of an entire business that includes one or several trademarks. Trademarks are measured at cost after any accumulated amortization and accumulated impairment. Trademarks that have an indefinite useful life are not amor tized, but rather tested annually for impairment along with the impairment testing of goodwill. Trademarks with a limited useful life are amortized on a straightline basis during their anticipated useful life, which varies between 3–25 years. Licenses, patents and similar rights Intangible assets also include patents, licenses and other similar rights. Acquired assets of this type are measured at cost and are amortized on a straightline basis during their anticipated useful life, which varies between 3–20 years. Customer relations Customer relations are measured at fair value at the time of the acquisition. The value of these customer relations is amortized over their useful life, which is considered to be between 3–15 years. Research and development Research expenditure is recognized as an expense as incurred. Identifiable expenditure for development of new prod ucts and processes is capitalized to the extent it is expected to provide future economic benefits. In cases in which it is difficult to separate the research phase from the development phase in a project, the entire project is treated as research and expensed immediately. Development costs for packing and packaging materials are expensed directly. In general, development projects are conservatively assessed due to the difficulty in determining what will lead to com mercial success. Capitalized expenditures are amortized on a straightline basis over the estimated useful life, from the date when the asset is ready for use. The amortization period is between 5–10 years. Impairment testing Goodwill is tested annually for impairment and when there is an indication of an impairment need. When testing for impairment the goodwill is allocated to cashgenerating units, or groups of cashgenerating units, which for Essity coincide with the operating segments Health & Medical, Consumer Goods and Professional Hygiene. The test compares the carrying amounts of the cashgenerating units with the recoverable amounts. The recoverable amount of each cashgenerating unit is determined by discounting future cash flows in order to determine their value in use. The cal culation of future cash flows is based on the strategic plans adopted by the Executive Management Team for the next three years. The carrying amount for the cashgenerating unit includes goodwill, trademarks with indefinite useful lives and assets with definite useful lives, such as noncurrent assets, trademarks and working capital. Effects of expansion investments are excluded when calculating the value in use. The value of depreciated assets is tested for impairment whenever there are indications that the carrying amount might not be recoverable. In cases in which the carrying amount of an asset or cashgenerating unit exceeds its estimated recoverable amount, an impairment loss is recog nized on the asset down to the recoverable amount. An impairment loss recognized earlier is reversed, if the reasons for the impairment no longer exist. The carrying amount after the reversal is limited to what it would have been had no past impairment been recognized. Impairment losses on goodwill are never reversed. Emission allowances and costs for carbon dioxide emissions Essity participates in the European system for emission allowances. When emission allowances relating to carbon dioxide emissions are received from an individual EU state, they are recognized as an intangible asset and as deferred income (liability). Allowances are received free of charge and re cognized at market value as of the date when the allocation is received. During the period, Essity provides for carbon dioxide emissions made. At the same time the deferred income is reversed by the corresponding amount thereby resulting in no net effect in profit or loss. If the emission allowances received do not cover emissions made, Essity makes a provision for the deficit valued at the market value on the balance sheet date. Sales of surplus emission allowances are recognized as income on the delivery date. If the market price of emission allowances on the balance sheet date is less than recognized cost, any surplus emis sion allowances that are not required to cover emissions made are impaired to the market price applying on the balance sheet date. In conjunction with this, the remaining part of the deferred income is recognized as income by a corre sponding amount and therefore no net effect occurs in profit or loss. The emission allowances are used as payment in the settlement with the state regarding liabilities for emissions. Key assessments and assumptions KAA In connection with the annual impairment testing of goodwill, the recoverable amount is calculated. The recoverable amount for the cashgenerating units is determined by calculating value in use. Calculation of the value in use is based on the strategic plans for the next three years adopted by the Executive Management Team, which in turn is based on assessments and assumptions. The most important assessments and assumptions pertain to forecasts for organic growth, the profit margin and the discount rate used. The growth assumptions are in line with historic outcome and expected global market growth. Profit margin assumptions in the strategy plans are based on current market prices and costs adjusted for anticipated price and cost changes as well as assumed productivity development for which an adjustment is made in impairment testing for the part generated from forecasted strategic investments. The discount rate used in the present value calculation of the anticipated future cash flows is the current weighted average cost of capital (WACC) established within the Group for the markets in which the cashgenerating units conduct operations. The expected sustained future cash flow for periods that are beyond the planning horizon of the strategy plan are extrapolated from the final year of the strategy plan using assumed sustained growth of 2% (2; 2). Goodwill SEKm 2024 2023 20221) Value, January 1 39,337 44,786 37,803 Assets held for sale – –4,361 – Company acquisitions – –14 3,617 Reclassifications – – –20 Impairment –70 –356 –292 Translation differences 1,871 –718 3,678 Value, December 31 BS 41,138 39,337 44,786 1) Including discontinued operations. Contents 151Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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D1. Intangible assets, cont. Impairment testing Annual testing for impairment of goodwill and other intangible assets is carried out in the fourth quarter. The testing showed that no impairment was needed for 2024, 2023 or 2022. The WACC before tax used in the impairment testing of good will is presented in the table below. Sensitivity analyses show that reasonable changes to key parameters do not give rise to any impairment requirement. In addition to annual impairment testing of the cashgenerating units, outlined above under the section Impairment testing, cashgenerating units and individual assets are also tested when there is an indication of an impairment need. Distribution by operating segment Goodwill Trademarks WACC, before tax % SEKm 2024 2023 20221) 2024 2023 20221) 2024 2023 20221) Health & Medical 17,823 16,948 17,483 8,088 7,837 8,069 12.1 12.1 10.5 Consumer Goods 14,429 14,135 18,443 6,141 6,153 9,010 11.9 12.4 11.5 Professional Hygiene 8,886 8,254 8,860 83 75 78 11.1 11.1 9.8 Total BS 41,138 39,337 44,786 14,312 14,065 17,157 1) Including discontinued operations. Emission allowances TD1:1 SEKm 2024 2023 2022 Value, January 1 1,019 740 343 Emission allowances received 546 837 534 Purchases 48 151 136 Sales –84 0 0 Impairment –36 0 0 Settlement with the government –702 –695 –313 Translation differences 38 –14 40 Value, December 31 829 1,019 740 Intangible assets Trademarks Technologies, Customer relations and similar rights Capitalized development costs Total Intangible assets SEKm 2024 2023 20221) 2024 2023 20221) 2024 2023 20221) 2024 2023 20221) Accumulated costs 15,525 14,986 18,072 16,128 15,001 15,756 781 671 661 32,434 30,658 34,489 Accumulated amortization –1,099 –921 –915 –10,609 –8,850 –8,439 –424 –289 –260 –12,132 –10,060 –9,614 Accumulated impairment –113 0 – –85 –80 –81 –199 –193 –188 –397 –273 –269 Total 14,313 14,065 17,157 5,434 6,071 7,236 158 189 213 19,905 20,325 24,606 Value, January 1 14,065 17,157 14,081 6,071 7,236 7,154 189 213 228 20,325 24,606 21,463 Assets held for sale – –2,861 – – –332 – – – – – –3,193 – Investments2) 7 – – 484 513 612 7 15 26 498 528 638 Company acquisitions – – 2,131 – – 143 – – – – – 2,274 Reclassifications – – – 18 20 38 –6 – – 12 20 38 Amortization3) –126 –117 –171 –1,299 –1,282 –1,225 –39 –37 –30 –1,464 –1,436 –1,426 Impairment –1134) – – –2 – – – – –31 –115 – –31 Translation differences 480 –114 1,116 –162 –84 514 7 –2 20 649 –200 1,650 Value, December 31 14,313 14,065 17,157 5,434 6,071 7,236 158 189 213 19,905 20,325 24,606 Emission allowances, net value TD1:1 829 1,019 740 Value, December 31 including emission allowances BS 20,734 21,344 25,346 1) Including discontinued operations. 2) In 2024, interest expenses were capitalized in Capitalized development costs in the amount of SEK 6m (6; 9). The average interest rate used was 4%. 3) Amortization of other acquisitionrelated intangible assets such as Trademarks, Customer relations and Technologies is recognized on separate lines in the income statement while amortization of Other intangible assets is included in Cost of goods sold and Sales, general and administration. 4) Impairment of trademarks in Essity related to Vinda is included in Profit for the period, discontinued operations, in the amount of SEK –89m after tax, see Note G4 on page 173. Contents 152Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Property, plant and equipment Buildings Land and land improvements Machinery and equipment Construction in progress SEKm 2024 2023 20221) 2024 2023 20221) 2024 2023 20221) 2024 2023 20221) Accumulated costs 24,273 22,515 29,533 4,564 4,329 4,973 89,910 84,186 100,835 7,382 7,197 5,617 Accumulated depreciation –13,483 –12,553 –14,008 –809 –755 –752 –60,661 –57,441 –65,051 – – –1 Accumulated impairment –506 –424 –863 –41 –38 –57 –2,284 –2,068 –2,679 –41 –39 –76 Total 10,284 9,538 14,662 3,714 3,536 4,164 26,965 24,677 33,105 7,341 7,158 5,540 Value, January 1 9,538 14,662 13,431 3,536 4,164 3,567 24,677 33,105 30,789 7,158 5,540 6,178 Assets held for sale – –4,884 – – –610 – – –7,784 – – –799 – Investments 259 147 258 14 4 16 1,576 1,134 982 5,055 5,094 5,037 Sales and disposals –5 –26 –17 –1 –5 –27 –60 –65 –58 –2 –4 –4 Company acquisitions – – – – – – – – 106 – – 2 Company divestments – – – – – – – –1 – – – – Reclassifications 1,019 375 1,208 92 7 357 3,952 2,365 4,567 –5,075 –2,767 –6,170 Depreciation2) –721 –724 –891 –39 –37 –37 –3,914 –3,912 –4,978 – – –1 Impairment –60 –156 –594 – –15 –32 –307 –415 –1,151 –2 –2 –45 Reversal of impairment – 22 – – – – 149 57 – 15 2 – Translation differences 254 122 1,267 112 28 320 892 193 2,848 192 94 543 Value, December 31 10,284 9,538 14,662 3,714 3,536 4,164 26,965 24,677 33,105 7,341 7,158 5,540 1) Including discontinued operations. 2) Included primarily in Cost of goods sold. D2. Property, plant and equipment Accounting principles AP Property, plant and equipment Property, plant and equipment is measured at cost less accumulated depreciation and any impairment. In cases where an investment in foreign currency has been recognized using hedge accounting, the gain/loss from the hedge is recog nized as part of the acquisition cost. In major projects, costs for runningin and startup are included in the cost for prop erties and production facilities. Borrowing costs are included in the cost of investments exceeding SEK 250m that take more than 12 months to complete. Expenses for repairs and maintenance are expensed directly in profit or loss. Depreciation and impairment Land is not subject to depreciation. Buildings, machinery and equipment are depreciated on a straightline basis over the expected useful lives of the assets. If, at the balance sheet date, there is an indication that property, plant and equip ment has declined in value, impairment testing is carried out. Expected useful lives Type of asset Number of years Buildings 15–50 Energy plants 15–30 Pulp and paper mills 10–25 Land improvements 10–20 Converting machines, other machinery 7–18 Office equipment 5–10 Vehicles 4–5 Tools 3–10 Computers 3–5 Contents 153Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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D2. Property, plant and equipment, cont. Impairment losses for the year totaling SEK 370m are related mainly to impairment of noncurrent assets in Professional Hygiene in the USA and Consumer Goods in Europe. The reversal of previous impairment losses of SEK 164m took place in Consumer Goods in Spain and Sweden, respectively. During the period, interest was capitalized in machinery and equipment in an amount of SEK 21m (–; 41) and in construction in progress in an amount of SEK 12m (34; 3). The average interest rate used was 4% (4; 3). Contract obligations relating to the acquisition of property, plant and equipment amounted to SEK 3,215m (4,048; 5,052) at yearend. Total property, plant and equipment SEKm 2024 2023 20221) Accumulated costs 126,129 118,227 140,958 Accumulated depreciation –74,953 –70,749 –79,812 Accumulated impairment –2,872 –2,569 –3,675 Total 48,304 44,909 57,471 Value, January 1 44,909 57,471 53,965 Assets held for sale – –14,077 – Investments2) 6,904 6,379 6,293 Sales and disposals –68 –100 –106 Company acquisitions – – 108 Company divestments – –1 – Reclassifications –12 –20 –38 Depreciation3) –4,674 –4,673 –5,907 Impairment –369 –588 –1,822 Reversal of impairment 164 81 – Translation differences 1,450 437 4,978 Value, December 31 48,304 44,909 57,471 1) Including discontinued operations. 2) Government grants received in 2024 reduced recognized investments by SEK 2m (0; 36). 3) Included primarily in Cost of goods sold. D3. Inventories Accounting principles AP Inventories are measured at the lower of cost and net realizable value. Cost is calculated mainly by applying the firstin, firstout (FIFO) principle or weighted average cost formula. The cost of inventories and work in progress includes raw material costs, direct labor, other direct expenses and productionrelated overheads, based on a normal capacity utilization. The net realizable value is the calculated sales price received for normal business transactions less calculated sales costs. Inventories SEKm 2024 2023 2022 Raw materials and consumables 4,270 4,022 10,023 Spare parts and supplies 2,901 2,519 2,572 Products in progress 1,759 1,772 2,482 Finished products 9,899 9,210 13,775 Advance payments to suppliers 85 23 36 Total BS 18,914 17,546 28,888 Impairment of inventories amounted to SEK 686m (1,084; 821), of which SEK 77m (167; 83) was recognized in conjunc tion with restructuring as an item affecting comparability, refer to Note B3 Operating expenses on page 141. D4. Other current receivables Other current receivables SEKm 2024 2023 2022 VAT receivables 1,318 951 1,522 Prepaid expenses and accrued income 1,122 986 895 Suppliers with debit balance 91 103 198 Receivables for electricity and gas 326 282 168 Receivables from authorities 121 89 156 Derivatives1) 356 228 2,158 Other receivables2) 1,146 752 664 Total BS 4,480 3,391 5,761 1) For more information see Note E1 Financial instruments by category and measurement level on page 156. 2) Increase in other receivables mainly relates to an increase in receivables from insurance companies for damages and receivables from the sale of emission allowances. D5. Other liabilities Other liabilities SEKm 2024 2023 2022 Other non-current liabilities Derivatives1) 9 155 345 Other noncurrent liabilities2) 507 918 851 Total BS 516 1,073 1,196 Of which items that fall due for payment later than within five years 15 21 23 Other current liabilities Derivatives1) 181 1,755 1,072 Accrued expenses and prepaid income TD5:1 15,402 14,497 16,316 VAT liabilities 1,604 1,348 1,388 Other operating liabilities 1,762 1,543 2,219 Total BS 18,949 19,143 20,995 1) For more information see note E6 Derivatives and hedge accounting on page 160. 2) The post includes deferred purchase considerations for acquired operations and liabilities to noncontrolling interests. Contents 154Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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D5. Other liabilities, cont. Accrued expenses and prepaid income TD5:1 SEKm 2024 2023 2022 Bonus and discounts to customers 7,874 7,782 8,016 Accrued vacation pay liability 1,060 996 944 Accrued social security costs 531 496 459 Other liabilities to personnel 2,344 2,000 2,014 Other items 3,593 3,223 4,883 Total 15,402 14,497 16,316 D6. Other provisions Accounting principles AP Provisions are recognized in the consolidated balance sheet when there is a legal or informal obligation arising from past events and it is probable that payments will be required to settle the obligation. It must also be possible to reliably estimate the amount to be paid. The provision is valued at the present value of the anticipated future expenditure to settle the obligation. A provision for restructuring measures is recognized when the Group has established a detailed plan and either implementation has begun or the main features of the measures have been communicated to the parties involved. Restructuring costs include, for example, costs for plant closures, impairment of production machinery and costs for personnel reductions. Provisions for environment contain provisions for carbon dioxide emissions as well as provisions for site restorations. See Note D1 Intangible assets for accounting principles on carbon dioxide emission rights and carbon dioxide emissions. Key assessments and assumptions KAA The amount of the provisions made relating to legal disputes is based on the company’s best assessment, which was determined in consultation with local expertise in the field. Other provisions 2024 SEKm Restructuring program Environment Legal disputes Other Total Value, January 1 668 722 106 378 1,874 Provisions 409 676 33 290 1,408 Utilizations –541 –702 –14 –75 –1,332 Reclassifications – – –3 3 0 Reversals –62 – –3 –47 –112 Translation differences 28 – 7 11 46 Value, December 31 502 696 126 560 1,884 Provisions comprise: Current provision BS 1,377 Noncurrent provision BS 507 Other provisions, previous periods SEKm 2023 2022 Value, January 1 1,708 1,132 Provisions 1,876 1,044 Utilizations –1,535 –476 Dissolutions –141 –78 Translation differences –34 86 Value, December 31 1,874 1,708 Distribution of other provisions by maturity, SEKm Year of maturity 2025 1,377 2026 340 2027 119 2028 and later 48 Total 1,884 Provisions for the period for Environment pertain to SEK 676m for carbon dioxide emissions, which will be settled in 2025. The provisions recognized at the end of the period attributable to Restructuring programs relate to restructuring measures in all three business areas. The provision for Environment mainly relates to liabilities for carbon dioxide emis sions, and Legal disputes consists of several cases of minor monetary value. Other provisions mainly comprise reserves linked to the LTI programs. D7. Contracts with Supplier Finance Arrangements The Group has contracts with supply chain finance (SCF) in a few selected countries. Under the SCF, a bank or finance company agrees to pay amounts to a participating supplier in respect of invoices owed by the Group and the bank receives payment from the Group at a later date. The main purpose of these arrangements is to facilitate efficient pay ment processing and enable participating suppliers to receive payments from the bank before the invoice’s maturity date. There are no guarantees or other types of security provided by the Group to the banks related to the SCF. Carrying amount of financial liabilities, SEKm Value December 31, 2024 Value January 1, 2024 Recognized in trade payables 581 489 of which suppliers have received payment from financing provider 383 399 The companies’ payment terms are on average 23 days longer for suppliers participating in the SCF, compared to suppliers providing similar products and services, but not participating in the SCF. There were no material business combinations or foreign exchange differences or other noncash transfers relating to the carrying amount of liabilities subject to supplier finance arrangements. Contents 155Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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E. Capital structure and financing E1. Financial instruments by category and measurement level Accounting principles AP Financial instruments recognized in the balance sheet include cash and cash equivalents, securities, other financial receivables, trade receivables, trade payables, loans and derivatives. Current investments and derivatives are recognized on the trade date. Financial assets and loans are recognized on the settlement date. Trade receivables and trade payables are recognized in the balance sheet once the invoice has been sent or received, respectively. Financial assets are initially recognized at cost, and transaction costs are included for instruments that are not measured at fair value. Financial assets are recognized in the balance sheet until the rights in the agreement have been realized or the company no longer has the rights to the asset. Financial assets measured at amortized cost are continu- ously reviewed according to the expected loss model to assess the need for credit loss provisions. Financial liabilities are measured at amortized cost, except in cases where they are recognized at fair value using hedge accounting. Financial liabilities are derecognized from the balance sheet when Essity has met its commitments. Essity recognizes financial instruments with a remaining maturity of less than 12 months as current assets and liabili- ties and those that exceed 12 months as non-current assets and liabilities. Fair value measurement For the financial instruments for which market quotations are available, actual prices are used for fair value measure- ment (Level 1). In the absence of market quotations for the instruments, Essity determines fair values with the aid of common valuation models, using quoted prices of similar assets or liabilities in active markets (Level 2). The fair value of non-current loans measured at prevailing market interest rates is presented in Note E4 Financial liabilities on page 159. The fair value of current financial liabilities and investments is considered to correspond to the carrying amount, since a change in market interest rates does not have a significant effect on market value. Classification and subsequent recognition Under IFRS 9 Financial instruments, financial assets are to be classified on the basis of the company’s business model and the purpose of contractual cash flows. Amortized cost Financial assets held to collect contractual cash flows, and whose cash flows only consist of interest and the principal amount, are to be measured at amortized cost. The main rule is that financial liabilities are measured at amortized cost with the exception of the liabilities described in the measurement categories below. Since the majority of Essity’s finan- cial assets is held to collect contractual cash flows and are held to maturity, they are recognized at amortized cost according to the effective interest method. All liabilities, excluding derivatives and the liabilities included in a hedging relationship, are measured at amortized cost. Fair value through comprehensive income Financial assets, which are held for the purpose of collecting contractual cash flows (only interest and principal amount) and which are to be sold before maturity, are measured at fair value through other comprehensive income with reclassi- fication to profit or loss. Essity did not recognize any assets in this category during the year. For financial assets comprising an equity instrument, the company can, on initial recognition, make an irrevocable choice to recognize the asset at fair value through other comprehensive income without the option of reclassification to profit or loss. Essity has an asset valued at SEK 109m recognized in this category. Fair value through profit or loss Financial assets that do not fulfill the requirements as stated in the categories described above are to be measured at fair value through profit or loss. Financial assets and liabilities can, on initial recognition, irrevocably and under certain circumstances, be recognized at fair value through profit or loss if this leads to more relevant information. Derivatives are recognized at fair value through profit or loss. During the year, Essity did not recognize any financial assets or liabili- ties, except for derivatives and liabilities that are part of a hedging relationship, in this category. For more information, refer to Note E6 Derivatives and hedge accounting on page 160. Accounting for derivatives used for hedging purposes All derivatives are initially and continuously recognized at fair value in the balance sheet. Gains and losses on remeasure- ment of derivatives used for hedging purposes are recognized in accordance with the accounting principles stated in Note E6 Derivatives and hedge accounting on page 160. Financial instruments by category and measurement level SEKm Note Measurement level 2024 2023 2022 Financial assets measured at fair value through profit or loss Derivatives – Non-current financial assets E2 2 – – 9 Derivatives – Current financial assets E2 2 633 461 1,109 Derivatives – Other current receivables D4 2 76 78 513 Total 709 539 1,631 Financial liabilities measured at fair value through profit or loss Non-current financial liabilities E4 2 22,234 24,993 23,763 Current financial liabilities E4 2 4,312 – 4,489 Derivatives – Non-current financial liabilities E4 2 278 167 276 Derivatives – Current financial liabilities E4 2 314 1,780 424 Derivatives – Other current liabilities D5 2 83 277 65 Total 27,221 27,217 29,017 Loan and trade receivables measured at amortized cost Non-current financial assets E2 – 19 19 22 Current financial assets E2 – 4,652 3,504 3,459 Trade receivables E3 – 23,538 21,920 25,990 Cash and cash equivalents E2 – 10,962 5,159 4,288 Total 39,171 30,602 33,759 Financial assets measured at fair value through other comprehensive income Non-current financial assets E2 1 109 98 92 Financial liabilities measured at amortized cost Non-current financial liabilities E4 – 12,728 14,068 26,935 Non-current lease liabilities E4 – 3,302 3,326 3,392 Current financial liabilities E4 – 383 12,907 7,338 Current lease liabilities E4 – 1,025 812 889 Trade payables – – 17,098 15,119 25,644 Total 34,536 46,232 64,198 Derivatives used for hedge accounting Non-current financial assets E2 2 – – – Other non-current assets – 2 56 6 767 Other current receivables D4 2 280 150 1,645 Current financial assets E2 2 57 1,294 373 Total 393 1,450 2,785 Contents 156Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Financial instruments by category and measurement level SEKm Note Measurement level 2024 2023 2022 Non-current financial liabilities E4 2 2,132 2,781 3,876 Other non-current liabilities D5 2 9 155 345 Current financial liabilities E4 2 390 150 133 Other current liabilities D5 2 98 1,478 1,007 Total 2,629 4,564 5,361 These financial instruments are measured at fair value, with the exception of loans and trade receivables and financial liabilities measured at amortized cost. According to Essity’s assessment, the fair value essentially corresponds to the carrying amount, with the exception of non-current liabilities, the fair value of which is disclosed in Note E4 Financial liabilities on page 159. E1. Financial instruments by category and measurement level, cont. Measurement levels Level 1: Quoted prices on an active market for identical assets or liabilities, such as shares or bonds quoted on a stock exchange. Level 2: Other observable inputs for the asset or liability than quoted prices included in Level 1, either directly (price quotations) or indirectly (obtained from price quotations), such as currency forward contracts or interest rate swaps. Financial instruments in other notes to the balance sheet 2024 2023 2022 SEKm Note Financial instruments Of which derivatives Financial instruments Of which derivatives Financial instruments Of which derivatives Assets Financial assets, cash and cash equivalents E2 16,432 690 10,535 1,755 9,352 1,491 Other non-current assets – 56 56 6 6 767 767 Trade receivables E3 23,538 – 21,920 – 25,990 – Other current receivables D4 356 356 228 228 2,158 2,158 Total 40,382 1,102 32,689 1,989 38,267 4,416 Liabilities Financial liabilities E4 47,098 3,114 60,984 4,878 71,515 4,709 Other non-current liabilities D5 9 9 155 155 345 345 Trade payables – 17,098 – 15,119 – 25,644 – Other current liabilities D5 181 181 1,755 1,755 1,072 1,072 Total 64,386 3,304 78,013 6,788 98,576 6,126 E2. Financial assets, cash and cash equivalents Accounting principles AP Cash and cash equivalents are defined as cash and bank balances as well as current investments with a maturity of less than three months from the acquisition date. Restricted deposits are not included in cash and cash equivalents. Loan receivables are recognized at amortized cost. Financial assets measured at amortized cost are continuously reviewed to assess the need for credit loss provisions. For a description of the methods used by Essity to manage its liquidity risk, refer to the Risks and risk management section on page 41. Financial assets, cash and cash equivalents Carrying amount SEKm 2024 2023 2022 Non-current financial assets Financial assets measured at fair value through other comprehensive income 109 98 92 Financial assets measured at amortized cost Loan receivables, other 19 19 22 Derivatives – – 9 Total BS 128 117 123 Current financial assets Financial assets measured at amortized cost Financial assets 2,353 3,504 3,459 Current investments 2,300 – – Derivatives 690 1,755 1,482 Total BS 5,342 5,259 4,941 Cash and cash equivalents Cash and bank balances 9,462 3,055 3,781 Current investments <3 months 1,500 2,104 507 Total BS 10,962 5,159 4,288 Total financial assets, cash and cash equivalents 16,432 10,535 9,352 Financial assets measured at fair value through comprehensive income relate to an equity instrument which was irre- vocably classified without any option of reclassification due to the long-term nature of the holding. The holding relates to shares in pension assets attributable to certain pension obligations. These assets are not included in the normal pen- sion calculations, as set out in Note C4 Remuneration after completion of employment on page 148. Changes in value excluding exchange gains and losses are recognized in equity under other comprehensive income, while exchange gains and losses are recognized in profit or loss. Cash and cash equivalents at December 31, 2024 include SEK 2,241m (2,790; 3,391) that is not fully available for use by Essity or for which other limitations exist, primarily cash and cash equivalents in countries that are subject to exchange restrictions and other legal restrictions. Accordingly, it is not possible to immediately use these cash and cash equiva- lents in other areas of the Group, although it is normally possible to use them in the operations of the respective country. The cash and cash equivalents can also be used to repay local debts in these countries. Such liabilities in these coun- tries amount to SEK 223m (501; 1,040). Contents 157Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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E3. Trade receivables Accounting principles AP Trade receivables are measured at amortized cost after a provision is made for doubtful receivables. Provisions for doubtful receivables are made using the simplified impairment method in IFRS 9 Financial instruments for trade receiv- ables, meaning the provision is measured at an amount that corresponds to the expected credit losses for the remain- ing terms of all outstanding trade receivables as per the balance sheet date. An impairment of trade receivables due to a possible credit loss impacts Essity’s operating profit as a selling cost in profit or loss and as a reduction of trade receivables by increasing the provision for doubtful receivables in the balance sheet. When the credit loss has been confirmed, the trade receivable is written off against the provision for doubtful receivables. A credit loss is regarded as confirmed when it has been determined that the customer is unable to fulfill the legal obligation to pay Essity, when debt-collection measures are no longer cost efficient, the customer’s operations have ceased or the customer has been declared bankrupt and this process has ended. Essity’s trade receivables are generally current and are not discounted. Key assessments and assumptions KAA The measurement of the provision for doubtful receivables is based on a combination of a collective and individual assessment. The collective assessment is based on the historical confirmed credit loss level in relation to net sales in the most recent five-year period, adjusted for changes in credit risk based on current and forward-looking information regarding macroeconomic factors that can impact the payment capacity of customers. These adjustments are made when necessary to take into account changed credit risk due to material changes in financial stability, GDP and employ- ment in the countries where Essity conducts the majority of its sales. Individual assessment of the need to impair doubt- ful receivables is made in cases when it has been determined that the customer is experiencing financial problems, when no payment has been received for receivables that have long fallen due or because of other significant events, such as financial crises or natural disasters. Trade receivables SEKm 2024 2023 2022 Trade receivables, gross 23,829 22,162 26,316 Provision for doubtful receivables TE3:2 –291 –242 –326 Total BS TE3:1 23,538 21,920 25,990 Analysis of credit risk exposure in Trade receivables TE3:1 SEKm 2024 2023 2022 Trade receivables after provision for doubtful receivables 23,538 21,920 25,990 Whereof: overdue < 30 days 2,506 2,054 1,976 30–90 days 958 459 669 > 90 days 723 600 733 Trade receivables, overdue 4,187 3,113 3,378 Credit risk in trade receivables and provisions for doubtful receivables Credit risk in trade receivables is managed through credit checks of customers using credit rating companies. The credit limit is set and regularly monitored. Essity’s customer structure is dispersed, with customers in many different areas of business. In 2024, Essity’s ten largest customers accounted for 24.3% (25.8; 23.0) of Essity’s sales. The single largest customer accounted for 4.4% (4.4; 4.5) of sales. Of the outstanding trade receivables on the balance sheet date 2024, the ten largest customers accounted for 22.5% (21.7; 18.2). Comparative figures for sales and trade receivables have been adjusted and exclude discontinued operations. During 2024, confirmed credit losses on trade receivables amounted to 0.03% (0.02; 0.01) of net sales, confirmed credit losses on trade receivables over the past five years amounted to an average of 0.02% (0.01; 0.02) of net sales. Recognized bad debt losses remain at a low level and despite increased risks arising from increased inflation and geopolitical unrest in the surrounding world, Essity’s overall assess- ment is that the credit risk within the customer segments in the countries where Essity conducts the majority of its sales has not changed materially during 2024. No adjustment was therefore made in the collective assessment (see account- ing principles, key assessments and assumptions above) regarding the expected impairment requirement for doubtful receivables in the 2024 year-end accounts. However, Essity continues to monitor development of GDP, financial stability and unemployment and will increase its provision for doubtful receivables if the situation deteriorates. In total, the Group has collateral mainly in the form of credit insurance taken out amounting to SEK 785m (1,125; 1,239). Of this amount, SEK 12m (25; 3) relates to the category trade receivables overdue. Provision for doubtful receivables TE3:2 SEKm 2024 2023 2022 Value, January 1 –242 –326 –298 Liabilities directly attributable to assets held for sale – 63 – Provision for expected credit losses –128 –33 –52 Confirmed losses 44 26 17 Decrease due to divestments – 23 – Decrease due to reversal of provisions for expected credit losses 36 4 36 Translation differences –1 1 –29 Value, December 31 –291 –242 –326 The expense for the period for doubtful receivables amounted to SEK –92m (–29; –16). Contents 158Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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E4. Financial liabilities Accounting principles AP The main principle for recognition of Essity’s financial liabilities is that they are initially measured at fair value, net after transaction costs, and subsequently at amortized cost according to the effective interest method. In cases where loans with fixed interest rates are hedged using derivatives, both the loan and the derivative are measured at fair value through a fair value hedge. Non-current loans that are subject to hedge accounting are dis- counted to the market interest rate without a credit spread. The cash flows from the interest rate derivatives are discounted to the market interest rate and the changes in value are recognized in profit or loss. Financial liabilities SEKm 2024 2023 2022 Non-current financial liabilities Bond issues 28,032 32,763 38,400 Derivatives 2,410 2,949 4,152 Non-current lease liabilities 3,302 3,326 3,392 Other non-current loans with maturities > 1 year < 5 years 4,930 971 5,892 Other non-current loans with maturities > 5 years 2,000 5,327 6,406 Total BS 40,674 45,336 58,242 Current financial liabilities Amortization within one year 84 55 14 Bond issues 4,312 6,632 5,599 Derivatives 704 1,930 557 Current lease liabilities 1,025 812 889 Loans with maturities of less than one year 176 5,989 6,000 Accrued financial expenses 123 230 214 Total1) BS 6,424 15,648 13,273 Total financial liabilities 47,098 60,984 71,515 Fair value of financial liabilities excluding leases 41,862 55,984 64,324 1) Fair value of current loans is estimated to be the same as the carrying amount. Borrowing Essity has a Euro Medium Term Note (EMTN) program with a program amount of EUR 6,000m (SEK 68,764m) for issuing bonds in the European capital market. As of December 31, 2024, a nominal EUR 3,149m (3,952; 4,450) was outstanding in public and bilateral issues with a remaining maturity of 3.9 years (4.0; 4.5). Public bond issues Issued Maturity Carrying amount, SEKm Fair value, SEKm Interest rate, % Notes SEK 850m 2025 853 853 0.50 Notes EUR 300m 2025 3,459 3,459 1.13 Notes EUR 500m 2026 5,771 5,751 3.00 Notes EUR 500m 2027 5,719 5,591 1.63 Notes EUR 600m 2029 6,117 6,039 0.25 Notes EUR 300m 2030 3,059 3,022 0.50 Notes EUR 700m 2031 7,366 6,740 0.25 Total 32,344 31,455 Non-current financial liabilities Carrying amount, SEKm Fair value, SEKm Other non-current loans with maturities > 1 year < 5 years 4,930 4,801 Other non-current loans with maturities > 5 years 2,000 2,136 Total 6,930 6,937 Essity has a Swedish and a Belgian commercial paper program that can be utilized for current borrowing. Commercial paper program Program size Issued SEKm Commercial paper SEK 15,000m – Commercial paper EUR 1,200m – Total – Essity has syndicated bank facilities to limit the refinancing risk and maintain a liquidity reserve. Contracted bilateral credit facilities with banks are used to supplement these syndicated bank facilities. Credit facilities Nominal Maturity Total SEKm Utilized SEKm Unutilized SEKm Syndicated credit facilities EUR 3,000m1) 2025 34,382 – 34,382 EUR 62m 2025 716 – 716 EUR 938m 2027 10,744 – 10,744 EUR 1,000m 2029 11,461 – 11,461 Total 57,303 57,303 1) Essity has a unilateral right to extend the maturity with up to 12 months from June 2025. Maturity profile of gross debt1), SEK m Total 2025 2026 2027 2028 2029 2030 2031+ Commercial paper program – – – – – – – – Bond issues –34,086 –4,288 –5,730 –5,730 – –6,876 –3,438 –8,022 Other borrowings –8,664 –1,089 –589 –283 –1,232 –3,492 20 –1,999 Total1) –42,749 –5,377 –6,319 –6,013 –1,232 –10,369 –3,418 –10,021 1) Gross debt includes accrued interest in the amount of SEK 238m. After additions for net pension provisions and lease liabilities and with deductions for cash and cash equivalents, interest- bearing receivables and equity instruments, the net debt was SEK 30,769m (49,964; 62,869). For a description of the methods used by Essity to manage its refinancing risk, refer to the Risks and risk management section on page 41. 1) Gross debt includes accrued interest in the amount of SEK 238m . Maturity profile of gross debt1) SEKm –15,000 –10,000 –5,000 0 5,000 2031+203020292028202720262025 Commercial papers Bond issues Other borrowings Contents 159Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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E5. Liquidity risk The table below shows the Group’s liquidity risk regarding financial liabilities (including interest payments), net settled derivatives that constitute financial liabilities and negative cash flows from gross settled derivatives. For a description of the methods used by Essity to manage its liquidity risk, refer to the Risks and risk management section on page 41. Liquidity risk SEKm Less than 1 year Between 1 and 3 years Between 3 and 5 years More than 5 years 2024 Loans including interest 5,017 4,730 7,276 24,399 Net settled derivatives 643 1,226 1,065 357 Energy derivatives 155 6 3 – Lease liabilities 1,165 1,692 895 1,054 Trade payables 17,090 8 – – Total 24,069 7,662 9,239 25,810 Gross settled derivatives1) 109,710 1,079 579 326 2023 Loans including interest 13,409 10,545 7,123 23,431 Net settled derivatives 928 1,565 1,386 746 Energy derivatives 1,634 155 – – Lease liabilities 1,019 1,508 926 1,291 Trade payables 15,119 0 – – Total 32,109 13,773 9,435 25,468 Gross settled derivatives1) 102,341 914 812 590 2022 Loans including interest 12,492 16,645 11,747 24,588 Net settled derivatives 171 330 344 347 Energy derivatives 998 333 – – Lease liabilities 1,082 1,450 937 1,285 Trade payables 25,559 85 – – Total 40,302 18,843 13,028 26,220 Gross settled derivatives1) 85,026 1,660 1,120 821 1) The gross settled derivatives have, largely, corresponding positive cash flows and therefore, in the opinion of Essity, do not constitute any real liquidity risk. E6. Derivatives and hedge accounting Accounting principles AP Accounting for derivatives used for hedging purposes All derivatives are initially and continuously measured at fair value in the balance sheet. Gains and losses on remeasure- ment of derivatives used for hedging purposes are recognized as described below. When using hedge accounting, the relationship between the hedging instrument and the hedged item is documented. Assessment of the effectiveness of the hedge is also documented, both when the transaction is initially executed and on an ongoing basis. Hedge effec- tiveness is the extent to which the hedging instrument offsets changes in value in a hedged item’s fair value or cash flow. The ineffective portion is recognized directly in profit or loss. Cash flow hedges Gains and losses on remeasurement of derivatives intended for cash flow hedges are recognized in equity under other comprehensive income and reversed to profit or loss at the rate at which the hedged cash flow affects profit or loss. If a hedge relationship is interrupted and cash flow is still expected, the result is recognized in equity under other compre- hensive income until the cash flow affects the result. If the hedge pertains to a balance sheet item, the result is trans- ferred from equity to the asset or liability to which the hedge relates when the value of the asset or liability is determined for the first time. In cases in which the forecast cash flow that forms the basis of the hedging transaction is no longer assessed as probable, the cumulative gain or loss that is recognized in equity under other comprehensive income is transferred directly to profit or loss. Cash flow hedges relating to energy are recognized as energy costs, that is, cost of goods sold. Cash flow hedges related to transaction exposure are recognized in consolidated net sales and expenses. Hedges of net investments in foreign operations Gains and losses on remeasurement of derivatives intended to hedge Essity’s net investments in foreign operations are recognized in equity under other comprehensive income. The cumulative gain or loss in equity is recognized in profit or loss in the event of divestment of the foreign operation. Fair value hedges The gain or loss from remeasurement of a derivative relating to fair value hedges is recognized in profit or loss together with changes in fair value of the hedged asset or liability. For Essity, this means that non-current loans that are subject to hedge accounting are discounted without a credit spread to the market interest rate and meet inherent interest rate derivatives’ discounted cash flows at the same interest rate. Economic hedges When Essity conducts hedges and the transactions do not meet requirements for hedge accounting according to IFRS 9, changes in fair value of the hedging instrument are recognized directly in profit or loss. Outstanding derivatives Of which SEKm Total Currency1) Interest rate Energy 2024 Nominal 145,583 114,450 28,355 2,778 Asset 1,102 788 – 314 Liability 3,304 976 2,164 164 2023 Nominal 138,632 106,756 27,386 4,490 Asset 1,989 1,810 – 179 Liability 6,788 2,218 2,781 1,789 2022 Nominal 135,197 95,423 31,993 7,781 Asset 4,416 1,522 40 2,854 Liability 6,126 927 3,868 1,331 1) Nominal SEK 115,162m (108,717; 110,196) is outstanding before the right of set-off. 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Balance sheet Essity uses financial derivatives to manage currency, interest rate and energy price risks. For a description of how Essity manages these risks, refer to the section on Risk and risk management on page 41. The table above shows the deriva- tives that impacted the Group’s balance sheet on December 31, 2024. For more information relating to derivatives in the balance sheet, see Note E1 Financial instruments by category on page 156. Offsetting of outstanding derivatives SEKm Assets Liabilities December 31, 2024 Gross amount 1,122 3,324 Offsetable amount –20 –20 Net amount recognized in the balance sheet 1,102 3,304 Collateral received/paid –64 –2,323 ISDA agreements whose transactions are not offset in the balance sheet –683 –683 Net after offsetting in accordance with ISDA agreements 355 298 December 31, 2023 Gross amount 1,989 6,788 Offsetable amount 0 0 Net amount recognized in the balance sheet 1,989 6,788 Collateral received/paid –7 –3,476 ISDA agreements whose transactions are not offset in the balance sheet –1,442 –1,442 Net after offsetting in accordance with ISDA agreements 540 1,870 December 31, 2022 Gross amount 4,436 6,146 Offsetable amount –20 –20 Net amount recognized in the balance sheet 4,416 6,126 Collateral received/paid –1,186 –3,252 ISDA agreements whose transactions are not offset in the balance sheet –2,134 –2,134 Net after offsetting in accordance with ISDA agreements 1,096 740 Profit or loss Hedges pertaining to transaction exposure had an impact of SEK 134m (–268; 164) on operating profit for the period. At year-end, fair value amounted to SEK 74m (–34; 0). Currency hedges increased the cost of non-current assets by SEK 31m (increased: 52; increased: 31). At year-end, fair value amounted to SEK –1m (–32;–15). Energy derivatives had an impact of SEK –1,625m (–2,288; 5,185) on operating profit for the period. Energy derivatives had an outstanding fair value of SEK 150m (–1,610; 1,523) at year-end. Derivatives impacted net interest items for the period in an amount of SEK –1,244m (–1,290; –585). The net fair value of outstanding interest rate derivatives amounted to SEK –2,164m (–2,781; –3,828) at year-end. For further information relating to financial items, see Note E7 Financial income and expenses on page 164. Sensitivity analysis Essity has performed sensitivity analysis calculations on the financial instruments’ risk at December 31, 2024 using assumptions on market movements that are regarded as reasonably possible in one year’s time. If the Swedish krona had unilaterally weakened/strengthened by 5% against all currencies, outstanding financial hedges, trade payables and trade receivables would have decreased/increased profit for the period before tax by SEK 35m (51; 2). If the Swedish krona had unilaterally weakened/strengthened by 5%, currency hedges relating to the cost of non- current assets would have increased/decreased equity by SEK 1m (1; 1). If energy prices had increased/decreased by 20%, outstanding financial hedges relating to natural gas and electricity, all other things being equal, would have decreased/increased energy costs for the period by SEK 378m (464; 1,172). In addition to the earnings impact, equity would have increased/decreased by SEK 176m (79; 541). However, the total energy cost for the Group would have been affected differently if the price risk related to supply contracts was taken into account. Derivatives with hedge accounting The various risk management strategies are presented in the Risks and risk management section on page 41. The deriva- tives to which hedge accounting is applied are presented below. Essity also continuously hedges the transaction expo- sure and energy price risks for the risks that are recognized in the balance sheet and profit or loss. Hedge accounting is not applied in respect of these risks. For currency derivatives, the revaluation from the risks meets derivatives in the financial positions. For energy derivatives, the result is recognized in profit or loss. IFRS 9 provides the option of hedging risk components. In 2024, Essity did not utilize this option except for energy where Essity in the Nordic region hedges the system price, which is a sub-component. The hedging ratio for the various risks for which hedge accounting is prepared is consistently 1:1. On account of the ongoing Interest Rate Benchmark Reform, Essity has evaluated the potential impact on existing hedging relationships. Essity has a number of fair value hedges that use Euribor as basis for the variable interest rate in the derivative. In the event Euribor ceases to exist, the hedging relationships are covered by the exemption rules in IFRS 9, thus resulting in no material effects in connection with the transition to a new interest rate benchmark. The nominal amount of the hedging relationships in question is presented in the tables below. Cash flow hedges Cash flow hedges for currency risk are prepared for transaction exposure, large investments and energy price risks in connection with purchases of electricity and gas. For cash flow hedges, hedges are prepared whereby critical terms match the hedged item. For the cash flow hedges prepared, this means that the change in fair value of the hedging instruments and the change in the hedged item are very highly correlated. Any ineffectiveness could, for example, be due to the time or the amount of the forecast cash flow mismatching with the cash flow of the derivative. In 2024, SEK 0m (0; 0) was recognized in profit or loss as ineffectiveness concerning the cash flow hedges. Currency derivatives mature until March 2027. Energy derivatives mature until December 2029 but most mature in 2025 and 2026. Hedging of net investments Essity has hedged net investments in a number of selected legal entities in order to achieve the desired currency distri- bution of net debt relative to assets so that key figures that are important to the company’s credit rating can be pro- tected in the long-term. The result of hedging positions affected equity by a total of SEK –1,488m (720; –1,397) during the year. This result is largely due to hedges of net investments in USD and EUR. In 2024, SEK 0m (0; 0) was recognized in profit or loss as ineffectiveness. The fair value of outstanding hedging transactions at the end of the period was SEK –281m (1,143; 203). In total at year-end, Essity hedged net investments outside Sweden amounting to SEK –10,080m (–16,870; –14,874). Essity’s total foreign net investments at year-end amounted to SEK 96,858m (82,972; 87,796). Fair value hedges For fair value hedges, the hedges have the same nominal amount, maturity dates and fixed interest as the hedged item. Hedge ineffectiveness is attributable, for example, to the various discount curves for the hedging instrument and the hedged item. Hedge ineffectiveness per maturity date is presented in the table below. Ineffectiveness is recognized in financial items under Fair value hedges, unrealized. See Note E7 Financial income and expenses on page 164. E6. Derivatives and hedge accounting, cont. 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2024 2023 2022 Currency and energy derivatives, SEKm Line in the balance sheet Nominal amount Carrying amount Nominal amount Carrying amount Nominal amount Carrying amount Currency derivatives – cash flow hedges Other non-current assets 148 1 – – 68 5 Currency derivatives – cash flow hedges Other current receivables 1,098 36 355 6 811 29 Currency derivatives – cash flow hedges Other non-current liabilities – – – – 176 12 Currency derivatives – cash flow hedges Other current liabilities 387 5 1,722 61 949 31 Energy derivatives – cash flow hedges Other non-current assets 545 56 63 5 1,579 761 Energy derivatives – cash flow hedges Other current receivables 1,244 244 272 144 1,767 1,616 Energy derivatives – cash flow hedges Other non-current liabilities 166 9 556 155 877 333 Energy derivatives – cash flow hedges Other current liabilities 567 93 3,212 1,417 3,027 976 Currency derivatives – hedging of net investments Non-current financial assets – – – – 300 0 Currency derivatives – hedging of net investments Current financial assets 5,841 57 25,908 1,293 10,579 334 Currency derivatives – hedging of net investments Non-current financial liabilities – – – – 450 8 Currency derivatives – hedging of net investments Current financial liabilities 23,571 358 7,013 150 6,166 133 Interest rate derivatives – hedging of fair value, SEKm Line in the balance sheet Maturity date Nominal amount Change in fair value, hedged item Change in fair value, derivatives Ineffectiveness Financial assets Financial liabilities Variable interest 2024 Current derivatives 2025 4,288 –115 111 –4 – –32 Euribor 6m +0.514–0.5168, Stibor +0.3375 Non-current derivatives 2026 5,730 –54 46 –8 – –5 Euribor 6m +0.5902–0.5904 2029 10,315 –228 226 –2 – –1,009 Euribor 6m +0.0517–0.3449 2030 3,438 –82 80 –2 – –416 Euribor 6m +0.5077–0.5102 2031 4,584 –109 108 –1 – –702 Euribor 6m +0.4298 Total 28,355 –588 571 –17 – –2,164 2023 Non-current derivatives 2025 4,167 –117 110 –7 – –150 Euribor 6m +0.514–0.5168, Stibor +0.3375 2026 5,528 –137 120 –17 – –64 Euribor 6m +0.5902–0.5904 2029 9,951 –612 581 –31 – –1,248 Euribor 6m +0.0517–0.3449 2030 3,317 –212 210 –2 – –501 Euribor 6m +0.5077–0.5102 2031 4,423 –303 299 –4 – –818 Euribor 6m +0.4298 Total 27,386 –1,381 1,320 –61 – –2,781 2022 Current derivatives 2023 4,449 144 –143 1 40 – Euribor 6m +0.7215–0.73165 Non-current derivatives 2025 4,187 308 –302 6 – –226 Euribor 6m +0.514–0.5168, Stibor +0.3375 2026 5,561 184 –157 27 – –148 Euribor 6m +0.5902–0.5904 2029 10,010 1,593 –1,598 –5 – –1,769 Euribor 6m +0.0517–0.3449 2030 3,337 606 –617 –11 – –666 Euribor 6m +0.5077–0.5102 2031 4,449 882 –893 –11 – –1,059 Euribor 6m +0.4298 Total 31,993 3,717 –3,710 7 40 –3,868 E6. Derivatives and hedge accounting, cont. Contents 162Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Derivatives with hedge accounting1) SEKm Asset Liability Net Tax Hedge reserve after tax Recirculated before tax Line in profit or loss/ balance sheet 2024 Derivatives with hedge accounting in hedge reserve Cash flow hedges Energy risk 300 –102 198 –26 172 1,762 3) Currency risk 37 –5 32 –10 22 9 4) Total 337 –107 230 –36 194 Derivatives with hedge accounting without hedge reserve Hedges of net investments in foreign operations Currency risk2) 77 –358 –281 Fair value hedges Interest rate risk – –2,164 –2,164 Total 414 –2,629 –2,215 –36 194 2023 Derivatives with hedge accounting in hedge reserve Cash flow hedges Energy risk 149 –1,572 –1,423 386 –1,037 1,665 3) Currency risk 6 –63 5) –57 16 –41 68 4) Total 155 –1,635 –1,480 402 –1,078 Derivatives with hedge accounting without hedge reserve Hedges of net investments in foreign operations Currency risk2) 1,293 –150 1,143 Fair value hedges Interest rate risk – –2,781 –2,781 Total 1,448 –4,566 –3,118 402 –1,078 2022 Derivatives with hedge accounting in hedge reserve Cash flow hedges Energy risk 2,377 –1,309 1,068 –289 779 –5,260 3) Currency risk 41 5) –43 –2 2 – 39 4) Total 2,418 –1,352 1,066 –287 779 Derivatives with hedge accounting without hedge reserve Hedges of net investments in foreign operations Currency risk2) 350 –145 205 Fair value hedges Interest rate risk 40 –3,868 –3,828 Total 2,808 –5,365 –2,557 –287 779 1) Outstanding derivatives with hedge accounting are included in the table Outstanding derivatives. 2) Derivatives before offsetting. 3) Cost of goods sold. 4) Cost of goods sold, Net sales and Property, plant and equipment. 5) Of which SEK –2m is realized and included in cash and cash equivalents. E6. Derivatives and hedge accounting, cont. Contents 163Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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The results from hedging of net investments in foreign operations are recognized in the translation reserve, refer to Note E8 Equity on page 164. The results from fair value hedges are recognized directly in profit or loss. Hedge reserve in equity Currency derivatives relating to hedging of transaction exposure mature mainly during the first half of 2025. At unchanged exchange rates, profit after tax will be affected in an amount of SEK 23m (–16; 5). Currency derivatives relating to hedging of the cost of non-current assets mature until March 2027. At unchanged exchange rates, the cost of non-current assets will increase by SEK 1m (increase by 25; increase by 5) after tax. The derivatives intended to hedge energy costs in the Group mature primarily during 2025 and 2026. At unchanged prices, the Group’s profit after tax will be affected positively in an amount of SEK 172m (negative 1,037; positive 779). E6. Derivatives and hedge accounting, cont. E7. Financial income and expenses Financial income and expenses SEKm 2024 2023 2022 Result from non-current financial assets Dividend 1 1 2 Interest income and similar profit items Interest income, investments 592 411 139 Total financial income IS 593 412 141 Interest expenses and similar loss items Interest expenses, borrowings –889 –1,259 –690 Interest expenses, derivatives –1,227 –1,220 –592 Interest expenses, lease liabilities –154 –138 –98 Fair value hedges, unrealized –17 –70 7 Other financial expenses –237 –81 –88 Total financial expenses IS –2,524 –2,768 –1,461 Total OCF –1,931 –2,356 –1,320 Other financial income and expenses include foreign exchange differences of SEK –123m (–43; –38). Sensitivity analysis If interest rate levels had been 1 percentage point higher/lower, with unchanged fixed-interest terms and volumes in the net debt, interest expenses for the period would have been SEK 269m (219; 332) higher/lower. Sensitivity analysis cal- culations have been performed on the risk to which Essity was exposed at December 31, 2024 using assumptions on market movements that are regarded as reasonably possible in one year’s time. For a description of the methods used by Essity to manage its interest rate risk, refer to the Risks and risk manage- ment section on page 41. E8. Equity Accounting principles AP Total equity is defined as equity attributable to owners of the Parent company and non-controlling interests. Equity attributable to owners of the Parent company includes reserves and retained earnings. Reserves Hedge reserve Gains and losses on remeasurement of derivatives intended for cash flow hedges are recognized in the hedge reserve as a component of other comprehensive income and reversed to profit or loss at the rate at which the hedged cash flow affects profit or loss. If the hedge pertains to a balance sheet item, the result is transferred from equity to the asset or lia- bility to which the hedge relates when the value of the asset or liability is determined for the first time. See also Note E6 Derivatives and hedge accounting on page 160 for further information on the accounting principles for derivatives used to hedge cash flows. Fair value through other comprehensive income Essity has a financial asset that consists of an equity instrument for which an irrevocable choice was made to, from initial recognition, recognize the asset at fair value in the fair value reserve in other comprehensive income without the option of reclassification to profit or loss. Translation reserve Exchange rate differences arising upon the translation of the financial statements of foreign operations, that have pre- pared their financial statements in a currency other than the currency in which the Group’s financial statements are pre- sented, are recognized in the translation reserve as a component of other comprehensive income. Gains and losses on remeasurement of derivatives intended to hedge Essity’s net investments in foreign operations are also recognized in the translation reserve as a component of other comprehensive income. The cumulative gain or loss in the translation reserve is recognized in profit or loss in the event of divestment of the foreign operation. Retained earnings Retained earnings includes profits for the period and previous years earned in the Parent company, subsidiaries and associates. Non-controlling interests Non-controlling interests are recognized as a separate item in consolidated equity. Refer also to accounting principles in Note F1 Group companies on page 166 and Note F4 Acquisitions and divestments of Group companies and other operations on page 169. Call/put options issued for future acquisitions of non-controlling interests The call option gives Essity the right to buy the seller’s remaining share either at a fixed price or at fair value at the future time when the option is exercised. The put option gives the seller the right to sell the remaining share either at a fixed price or at fair value at the future time when the option is exercised. The amount to be paid is initially recorded at present value as a liability. The liability is revalued and the change is reported in equity. If the options are not exercised at maturity, the liability will be reclassified to equity. Accordingly, in accounting terms, the acquisition is treated as though 100% of the company had been acquired. Repurchase of shares Expenditure for the purchase of own shares reduces retained earnings in equity in the Parent company and the portion of consolidated equity that pertains to owners of the Parent company. If these shares are sold, the sales proceeds are included in retained earnings in the equity pertaining to owners of the Parent company. Contents 164Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Equity, specification of reserves TE8:1 Hedge reserve1) Fair value through other comprehensive income5) Translation reserve5) Total reserves in equity5) SEKm 2024 2023 2022 2024 2023 2022 2024 2023 2022 2024 2023 2022 Value, January 1 –1,078 779 2,221 3 –3 10 10,496 10,701 4,078 9,421 11,477 6,309 Fair value through other comprehensive income 4 5 –16 4 5 –16 Cash flow hedges: Result from remeasurement of derivatives recognized in equity –3 –4,360 3,110 –3 –4,360 3,110 Transferred to profit or loss for the period 1,740 1,681 –5,252 1,740 1,681 –5,252 Translation differences in foreign operations2) –43 59 108 3,833 –796 7,733 3,790 –737 7,841 Gains/losses from hedges of net investments in foreign operations3) –1,641 720 –1,397 –1,641 720 –1,397 Tax on items recognized directly in/transferred from equity4) –453 711 561 –3 1 3 338 –129 287 –118 583 848 Other comprehensive income for the period, net of tax 1,241 –1,909 –1,473 1 6 –13 2,530 –205 6,623 3,772 –2,108 5,137 Transfer to cost of non-current assets concerning hedged investments, net of tax 31 52 31 31 52 31 Value, December 31 194 –1,078 779 4 3 –3 13,026 10,496 10,701 13,224 9,421 11,477 1) See also Note E6 Derivatives and hedge accounting on page 161 for details of when gains or losses are expected to be recognized. 2) Transfer to profit or loss of realized translation difference relating to divested and liquidated companies is included in the amount of SEK –627m (1,102; –). 3) Transfer of realized results from hedging of net investments in foreign operations regarding divested and liquidated companies to the income statement is included in the amount of SEK –152m (–; –). 4) Transfer of tax on items recognized directly in equity regarding divested and liquidated companies to the income statement is included in the amount of SEK 31m (–; –). 5) Certain comparative figures have been corrected compared to what was presented in the 2023 annual report. Specification of income tax attributable to components in other comprehensive income TE8:2 2024 2023 2022 SEKm Before tax Tax effect After tax Before tax Tax effect After tax Before tax Tax effect After tax Actuarial gains/losses on defined benefit pension plans 92 –33 59 1,334 –162 1,172 2,299 –662 1,637 Fair value through other comprehensive income 4 –3 1 5 1 6 –16 3 –13 Cash flow hedges 1,737 –453 1,284 –2,679 711 –1,968 –2,142 561 –1,581 Translation differences in foreign operations 4,623 4,623 –270 –270 8,216 8,216 Gains/losses from hedges of net investments in foreign operations –1,488 307 –1,181 572 –99 473 –1,435 295 –1,140 Total, continuing operations 4,968 –182 4,786 –1,038 451 –587 6,922 197 7,119 Total, discontinued operations –588 31 –557 –902 –30 –932 133 –8 125 Total operations 4,380 –151 4,229 –1,940 421 –1,519 7,055 189 7,244 E8. Equity, cont. The Annual General Meeting on March 29, 2024 resolved to distribute SEK 7.75 per share as an ordinary dividend to shareholders, or a total of SEK 5,443m. For the 2024 fiscal year, the Board of Directors proposes an ordinary dividend of SEK 8.25 per share, or a total of SEK 5,733m, the total dividend amount may change due to the ongoing buyback pro- gram described on page 9. Equity totaled SEK 88,741m (79,405; 76,564) at December 31, 2024. Pages 118–119 show the Consolidated statement of change in equity. The tables below show specifications of reserves and income tax attributable to components in other comprehen- sive income. At December 31, 2024, the debt/equity ratio amounted to 0.35 (0.68; 0.82). Changes in liabilities and equity are described in the Financial position section on page 39. Essity’s target for capital structure is to establish an effective capital structure, while at the same time ensuring long-term access to loan financing. Cash flow in relation to net debt is to be taken into consideration with the aim of maintaining a solid investment grade rating. Essity has a credit rating for long-term debt of Baa1 from Moody’s and BBB+ from Standard & Poor’s. Essity’s financial risk management is described in the Risks and risk management section on page 41. The Essity share section on page 9 outlines Essity’s dividend policy and buyback program, and the target for Essity’s capital structure is described in the Targets and outcomes section on page 25. Contents 165Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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F. Group structure F1. Group companies Accounting principles AP Group companies The companies which Essity has control over are consolidated as Group companies. Control means that Essity has sufficient influence to control the relevant activities of the Group company, and that Essity has the right to, and can influence, its variable returns from its participation. Essity owns 100% of most of the Group companies, which means that Essity has control. Non-controlling interests Non-controlling interests are recognized as a separate item in the consolidated statement of change in equity. Profit or loss and every component of other comprehensive income are attributable to the owners of the Parent company and to non-controlling interests. Losses attributable to non-controlling interests are recognized even if this results in a negative share. In acquisitions of less than 100%, when a controlling influence is achieved, non-controlling interests are deter- mined either as a proportional share of the fair value of identifiable net assets excluding goodwill or at fair value. Sub- sequent acquisitions up to 100% and divestments of participations in a Group company that do not lead to a loss of controlling influence are recognized as an equity transaction. Call and put options issued to Essity and holders of non-controlling interest in acquisitions of Group companies The call option gives Essity the right to acquire the seller’s remaining share either at a fixed price or at fair value at the future time when the option is exercised. Similarly, the put option gives the seller the right to sell the remaining share under the same conditions. The amount to be paid when redeeming these options is initially recorded as a financial lia- bility at present value in the balance sheet. If the options are not exercised at maturity, the liability will be reclassified to equity. Accordingly, in accounting terms, the acquisition is treated as though 100% of the company had been acquired. Jointly owned Group companies with significant non-controlling interests In September 2022, Essity acquired 80% of the Canadian company Knix Wear Inc., a leading provider of leakproof apparel for periods and incontinence. The agreement with the seller includes a call/put option to buy/sell the remaining shares in three years at fair value. The amount is recorded as a liability at present value, meaning the acquisition is treated as though 100% of the company had been acquired. List of major Group companies The Group’s participations in major Group companies at December 31, 2024 are presented below. The following selec- tion of wholly owned Group companies or Group companies with significant non-controlling interests includes compa- nies with external and internal sales that exceed SEK 1,000m in 2024. Company name Corp. Reg. No. Domicile Share of equity at December 31, 2024 Share of equity at December 31, 2023 Share of equity at December 31, 2022 Essity Australasia Limited 1470756 Auckland, New Zealand 100 100 100 Essity Australasia Pty Ltd 005 442 375 Springvale, Australia 100 100 100 Essity Austria Vetriebs GmbH FN613904 a Vienna, Austria 100 100 100 BSN medical GmbH HRB 124187 Hamburg, Germany 100 100 100 BSN Medical Inc. 3269728 North Carolina, USA 100 100 100 Essity Austria GmbH FN 49537 z Vienna, Austria 100 100 100 Essity Belgium SA-NV BE0405.681.516 Stembert, Belgium 100 100 100 Essity Canada Inc. 10470 9431 Ontario, Canada 100 100 100 Essity Centroamérica S.A. 3-101-211115 San José, Costa Rica 100 100 100 Company name Corp. Reg. No. Domicile Share of equity at December 31, 2024 Share of equity at December 31, 2023 Share of equity at December 31, 2022 Essity Chile S.A. 94.282.000-3 Santiago de Chile, Chile 100 100 100 Essity Czech Republic s.r.o. 485 36 466 Prague, Czech Republic 100 100 100 Essity Denmark A/S DK20 638 613 Allerød, Denmark 100 100 100 Essity Distribution B.V. 75490080 Amsterdam, Netherlands 100 100 100 Essity do Brasil Indústria e Comércio Ltda 72.899.016/0001-99 Jarinu, Brazil 100 100 100 Essity France SAS 509 395 109 Saint-Ouen, France 100 100 100 Essity Germany GmbH HRB 713 332 Mannheim, Germany 100 100 100 Essity Higiene y Salud México S.A. de C.V. SCM-931101-3S5 Mexico City, Mexico 100 100 100 Essity HMS North America Inc. 23-3036384 Delaware, USA 100 100 100 Essity Holding Netherlands B.V. 30-135 724 Zeist, Netherlands 100 100 100 Essity Hungary Kft. 01-09-716945 Budapest, Hungary 100 100 100 Essity Hygiene and Health AB 556007-2356 Gothenburg, Sweden 100 100 100 Essity Italy S.p.A. 3 318 780 966 Altopascio, Italy 100 100 100 Essity Norway AS 915 620 019 Oslo, Norway 100 100 100 Essity PLD France 509 599 619 Saint-Ouen, France 100 100 100 Essity Operations Allo, S.L. B31235260 Allo, Spain 100 100 100 Essity Operations France SAS 702 055 187 Saint-Ouen, France 100 100 100 Essity Operations Mainz-Kostheim GmbH HRB 5301 Mainz-Kostheim, Germany 100 100 100 Essity Operations Mannheim GmbH HRB 3248 Mannheim, Germany 100 100 100 Essity Operations Neuss GmbH HRB 14343 Neuss, Germany 100 100 100 Essity Operations Poland Sp. z.o.o. KRS No. 0000086815 Olawa, Poland 100 100 100 Essity Operations Wausau LLC 41-2218501 Wisconsin, USA 100 100 100 Essity PLD Belgium SA/NV 0794400504 Stembert, Belgium 100 100 100 Essity PLD Germany GmbH HRB 745270 Mannheim, Germany 100 100 100 Essity PLD Italy SpA 12142310155 Porcari, Italy 100 100 100 Essity PLD Netherlands BV 86987496 Zeist, Netherlands 100 100 100 Essity Poland Sp. z.o.o KRS No. 0000427360 Warsaw, Poland 100 100 100 Essity Professional Hygiene Germany GmbH HRB 710 878 Mannheim, Germany 100 100 100 Essity Professional Hygiene North America LLC 58-2494137 Delaware, USA 100 100 100 Essity Slovakia s.r.o. 36590941 Gemerska Horska, Slovakia 100 100 100 Essity Spain, S.L. B28451383 Puigpelat, Spain 100 100 100 Essity Switzerland AG CH-020.3.917.992-8 Schenkon, Switzerland 100 100 100 Essity UK Ltd. 3226403 Dunstable, UK 100 100 100 Familia del Ecuador 1791314379001 Quito, Ecuador 96 96 96 Familia del Pacifico S.A.S. 8170006802 Guachene Cauca, Colombia 96 96 96 OY Essity Finland AB 0165027-5 Espoo, Finland 100 100 100 Productos Familia S.A. Colombia 8909001619 Medellin, Colombia 96 96 96 Contents 166Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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F2. Investments in associates and joint ventures Accounting principles AP Joint arrangements Essity classifies its joint arrangements as joint ventures or joint operations, which are presented in Note F3 on page 169. Associates Associates are companies in which the Group exercises a significant influence without the partly owned company being a Group company or a joint arrangement. Normally, this means that the Group owns between 20% and 50% of the votes. Accounting for associates is carried out according to the equity method and they are initially measured at cost. Valuation of acquired assets and liabilities is performed in the same manner as for Group companies and the carrying amount for associates includes any goodwill and other Group adjustments. For further information see Note F4 on page 169. The Group’s share of profit after tax arising in the associate after the acquisition is recognized as a component of one line in the consolidated income statement “Share of results of associates and joint ventures”. Share of profits is calcu- lated on the basis of Essity’s share of equity in the respective associate. Joint ventures Joint ventures are defined as companies in which Essity together with other parties through an agreement, has shared control over operations. A joint venture entitles the joint owners to the net assets of the investment. Joint ventures are recognized in accordance with the equity method, meaning that a net item including the goodwill will be recognized for each joint venture in the balance sheet. A share in profits is recognized in the income statement as a component of “Share of results of associates and joint ventures”. Share of profits is calculated on the basis of Essity’s share of equity in the respective joint venture. Joint arrangements recognized in accordance with the equity method are initially measured at cost. Measurement of acquired assets and liabilities is carried out in the same way as for Group companies. Carrying amounts of investments in associates and joint ventures SEKm 2024 2023 2022 Associates Value, January 1 62 60 49 Assets held for sale – –3 Share of results of associates 67 23 6 Dividends received –27 –17 – Translation differences 3 –1 5 Value, December 31 105 62 60 Joint ventures Value, January 1 232 231 190 Share of results of joint ventures 11 16 32 Dividends received –6 –14 –9 Translation differences 9 –1 18 Value, December 31 246 232 231 Value, December 31, investments in associates and joint ventures BS TF3:1 351 294 291 Associates and joint ventures Associates Cartografica Galeotti S.p.A. in Italy manufactures and sells handkerchiefs and facial tissues. Essity’s ownership is 33% and was unchanged during the comparative periods. Cartografica Galeotti has its registered office in Lucca, Italy and its corporate registration number is 1333330464. Joint ventures Bunzl & Biach GmbH (Bunzl & Biach) Vienna is Essity’s single largest joint venture that operates in the recovered paper market and supplies raw materials to Essity’s business. Ownership is 49% and was unchanged during the comparative periods. Bunzl & Biach GmbH has its registered office in Vienna, Austria and its corporate registration number is FN 79555 v. Contents 167Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Material investments in associates and joint ventures, 100% of operations TF3:1 Associates Joint ventures Cartografica Galeotti Bunzl & Biach Total SEKm 2024 2023 2022 2024 2023 2022 2024 2023 2022 Condensed income statement Net sales 959 901 571 1,572 1,310 2,331 2,531 2,211 2,902 Depreciation 27 26 18 –23 –21 –19 4 5 –1 Operating profit 198 69 8 35 40 41 233 109 49 Interest income – – – 4 – – 4 – – Interest expenses – – – –2 – – –2 – – Other financial items –1 –1 –1 –1 2 2 –2 1 1 Tax expense –50 –9 7 –9 –14 –12 –59 –23 –5 Profit for the period 147 59 14 29 28 39 176 87 53 Other comprehensive income for the period – – – – – – – – – Comprehensive income for the period 147 59 14 29 28 39 176 87 53 Condensed balance sheet Non-current assets 79 95 117 244 232 197 323 327 314 Cash and cash equivalents 140 38 47 148 90 95 288 128 142 Other current assets 375 467 285 267 256 322 642 723 607 Total assets 594 600 449 659 578 614 1,253 1,178 1,063 Non-current financial liabilities 21 54 74 94 95 114 115 149 188 Other non-current liabilities 8 8 8 17 10 69 25 18 77 Current financial liabilities 260 79 53 5 15 23 265 94 76 Other current liabilities 15 4 4 205 149 99 220 153 103 Total liabilities 304 145 139 321 269 305 625 414 444 Net assets 290 455 310 338 309 309 628 764 619 Group share of net assets 96 150 102 166 151 151 262 301 253 Surplus value1) 8 –89 –46 56 50 49 64 –39 3 Carrying amount of the companies 104 61 56 222 201 200 326 262 256 Carrying amount of other associates2) 1 1 4 1 1 4 Carrying amount of other joint ventures 24 31 31 24 31 31 Carrying amount of investments in associates and joint ventures BS TF3:2 105 62 60 246 232 231 351 294 291 1) The results from the share in Cartografica Galeotti for the years 2023 and 2022 have been reported with a one-year delay. This means that Essity’s share of the results for the years 2023 and 2022 is based on Cartografica Galeotti’s annual reports for 2022 and 2021, respectively, as stated in the above summary of results and balance sheet for 2023 and 2022. However, Essity’s reported value in the balance sheet of Cartografica Galeotti as of the end of December 2023 and 2022 has been reduced by the dividends received during these years, which is why the reported value of Cartografica Galeotti is lower than the report- ed share of net assets according to the above summary. From 2024 onwards, the results from the share in Cartografica Galeotti will be reported with a six-month delay, which means that the share of results for the year 2024 is based on Cartografica Galeotti’s annual report for 2023 and the estimated preliminary results for the first half of 2024, i.e., for 18 months. However, the stated results and balance sheet for 2024 refer to the published annual report for 2023 for Cartografica Galeotti. Essity’s reported value in the balance sheet of Cartografica Galeotti as of the end of December 2024 is therefore based on the annual report for 2023, with deductions for dividends received during 2024 and additions for the estimated preliminary results for the first half of 2024. 2) The carrying amount of other associates has changed for comparative years as Cartografica Galeotti is reported separately. F2. Investments in associates and joint ventures, cont. Contents 168Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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F3. Joint operations Accounting principles AP Joint operations are defined as companies in which Essity, together with other parties through an agreement, has shared control over operations. In joint operations, parties to the agreement have rights to the assets and obligations for the liabilities associated with the investment, meaning that the operator must account for its share of the assets, liabili- ties, revenues and costs according to the proportional method. Measurement of acquired assets and liabilities according to the proportional method is carried out in the same way as for Group companies. Essity recognizes its proportional share of the company’s assets, liabilities, revenues and costs in its financial statements. For more information on joint operations, refer to Note G3 Transactions with related parties on page 172. Joint operations Company name Corp. Reg. No. Domicile Share of equity at December 31, 2024 % Share of equity at December 31, 2023 % Share of equity at December 31, 2022 % Uni-Charm Mölnlycke B.V. 02-330 631 Hoogezand, Netherlands 40 40 40 Nokianvirran Energia Oy (NVE) 213 1790-4 Kotipakka, Finland 27 27 27 Uni-Charm Mölnlycke Uni-Charm is classified as a joint operation since the parties to the agreement purchase all products produced by the company. The products are priced in a manner that allows the operations to receive full cost recovery for their produc- tion and financing costs. This means that the company in the joint operation is operated with near-zero profit and thus is not exposed to commercial risk. This joint operation has operations in Hoogezand in the Netherlands and Delaware in the USA. Nokianvirran Energia Essity has entered into an agreement with two other stakeholders to form a joint so-called mankala company in the Finnish energy market, where the joint parties produce heat and steam from biofuel. Each party in the joint operation is obligated to bear a portion of the fixed costs in proportion to its holding in the company and to pay for the raw materials used in the production of heat and steam in proportion to its consumption. Accordingly, the company is not profit-driven since the parties themselves bear their respective costs. The company is expected to generate near-zero profit and thus is not exposed to any commercial risk. F4. Acquisitions and divestments of Group companies and other operations Accounting principles AP Acquisitions of Group companies and other operations Essity applies IFRS 3 Business Combinations for acquisitions. In business combinations, acquired assets and assumed liabilities are identified and recognized at fair value on the date of acquisition (also known as purchase price allocation). The purchase price allocation also includes an assessment of whether there are any assets that are intangible in nature, such as technologies, trademarks, patents, customer relations or similar assets that are not recognized in the acquired unit. If the purchase consideration paid is higher than the net value of the acquired assets and assumed liabilities, the difference is recognized as goodwill. Any surplus value on property, plant and equipment is depreciated over the esti- mated useful life of the asset. Goodwill and strong trademarks with indefinite useful lives are not amortized; instead, they are subjected to annual impairment testing. Some trademarks and customer relations are amortized over their estimated useful lives. A purchase price allocation is considered preliminary until it is confirmed. A preliminary purchase price allocation is changed as soon as new information regarding assets/liabilities on the acquisition date is obtained, although the acquisition balance sheet must be confirmed not later than one year from the date of the acquisition. If the transferred consideration is contingent on future events, it is measured at fair value and any changes in value are recognized in profit or loss. Transaction costs in conjunction with acquisitions are expensed when they occur. Companies acquired during the period are included in the consolidated financial statements as of the acquisition date. Divested companies are included in the consolidated financial statements until the divestment date. Non-controlling interests Acquisitions of non-controlling interests are measured on an acquisition-by-acquisition basis, either as a proportional share of the fair value of identifiable net assets excluding goodwill (partial goodwill) or at fair value, which means that goodwill is also recognized on non-controlling interests (full goodwill). In step acquisitions in which a controlling influence is achieved, any net assets acquired earlier in the acquired units are remeasured at fair value and the result of the remeasurement is recognized in profit or loss. If the controlling influ- ence is lost upon the divestment of an operation, the result is recognized in profit or loss and the portion of the divested operation that remains in the Group is measured at fair value on the divestment date, with the remeasurement effect recognized in profit or loss. Increases in the ownership stake of Group companies after controlling influence is achieved are recognized as an equity transaction, meaning the difference between the purchase consideration paid and the carrying amount of the non-controlling interests is recognized as an increase or decrease in equity attributable to owners of the Parent com- pany. The same accounting procedure applies for divestments that take place without the loss of a controlling influence. Acquisitions in 2024 Essity completed no acquisitions in 2024. In November 2024, the Colombian hygiene company Productos Familia S.A. (“Familia”) offered its shareholders to buyback its own shares for a value of approximately SEK 1bn. Of this amount, SEK 51m was paid to non-controlling shareholders who accepted the offer, which entailed a corresponding decrease in Essity’s equity. Essity’s shareholding in the company increased marginally. Acquisitions in 2023 Essity completed no acquisitions in 2023. Acquisitions in 2022 Legacy On February 2, 2022, Essity acquired Legacy Converting, Inc., a USA-based company that operates in professional wiping and cleaning products. The company has about 30 employees. The final purchase price amounts to USD 39m (SEK 362m) with a potential additional earn-out amount of USD 10m (SEK 94m) on a cash and debt-free basis excluding financial lease liabilities. Contents 169Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Modibodi On July 7, 2022, Essity announced that the company has acquired the Australian company Modibodi, a leading leak- proof apparel company in Australia, New Zealand and the UK. The purchase price amounts to AUD 141m (approximately SEK 1bn) on a cash and debt-free basis. Modibodi has about 45 employees and headquarters in Sydney, Australia. Modibodi was consolidated into Essity’s accounts from August 1, 2022. Knix On July 8, 2022, Essity announced that the company had acquired 80% of the Canadian company Knix Wear Inc., a lead- ing provider of leakproof apparel for periods and incontinence. The transaction was finalized on September 1, 2022. The agreement with the seller includes a call/put option to buy/sell the remaining shares in three years at fair value when the option can be redeemed. The amount to be paid if the option is exercised is initially recorded at present value as a liabil- ity in Essity’s balance sheet. Accordingly, in accounting terms, the acquisition is treated as though 100% of the company had been acquired. The purchase price amounted to CAD 430m (SEK 3.5bn) on a cash and debt-free basis for 80% of the company. Acquisitions of Group companies and other operations The table below shows the fair value of acquired net assets recognized on the acquisition date, recognized goodwill and the effect on the Group’s cash flow statements. Acquisition balance sheets SEKm 2024 2023 2022 Intangible assets – – 2,274 Property, plant and equipment and right-of-use assets – 4 247 Other non-current assets – 26 31 Operating assets – –3 669 Cash and cash equivalents – – 49 Provisions and other non-current liabilities – –16 –632 Net debt excluding cash and cash equivalents – –4 –144 Operating liabilities – 3 –353 Fair value of net assets – 10 2,141 Goodwill – –14 3,608 Non-transferred consideration, recognized as a liability – – –908 Non-controlling interests 43 – 3 Acquisition of non-controlling interests recognized in equity attributable to owners of the Parent company 8 – 10 Consideration transferred 51 –4 4,854 Consideration transferred –51 4 –4,854 Settled debt pertaining to acquisitions in earlier years –17 –182 –6 Cash and cash equivalents in acquired companies – – 49 Effect on Group’s cash and cash equivalents, acquisition of Group companies and other operations CF –68 –178 –4,811 of which recognized as acquisitions in investing activities –17 –178 –4,798 of which recognized as acquisitions of non-controlling interests in financing activities –51 – –13 Acquired net debt excluding cash and cash equivalents – –4 –144 Acquisitions of Group companies and other operations during the period, including net debt assumed OCF –68 –182 –4,955 F4. Acquisitions and divestments of Group companies and other operations, cont. Divestments of Group companies and other operations On March 21, 2024, Essity completed the sale of its 51.59% shareholding in the Asian hygiene company Vinda International Holdings Limited (Vinda). The sales proceeds amounted to approximately HKD 14.6bn (SEK 19,360m). Total capital gain, excluding the reclassification of accumulated currency translation differences, amounted to SEK 8,366m. Including the reclassification of realized currency translation differences of SEK 748m after tax, the net gain amounted to SEK 9,114m, which is recognized in discontinued operations. See also Note G4 Assets held for sale and discointinued operations on page 173 for information on additional transaction costs of SEK –227m and impairment of intangible assets in Essity related to Vinda after tax of SEK –89m, which is also included in discontinued operations. On July 17, 2023, Essity divested its operations in Russia for a purchase price of SEK 1,171m on a debt-free basis. The earnings impact amounted to SEK 549m excluding the reclassification of accumulated currency translation differences. Including the reclassification of accumulated currency translation differences, earnings amounted to SEK –553m. In 2022, Essity’s net sales in Russia corresponded to about 2% of its total consolidated net sales. In September 2023, Essity divested a separate manufacturing and sterilization facility in New Zealand, pertaining to bandages for post-operative wounds intended for the local market, for a purchase price of SEK 63m. The earnings impact amounted to SEK 29m. Total capital gain, excluding the reclassification of accumulated currency translation differences for divestments in Russia and New Zealand, amounted to SEK 578m. Including the reclassification of realized negative currency translation differences totaling SEK –1,102m, the net loss amounted to SEK –524m, which is reported as an item affecting compara- bility. No divestments took place in 2022. Assets and liabilities included in divestments of Group companies and other operations SEKm 20241) 2023 2022 Intangible assets 7,404 – – Property, plant and equipment and right-of-use assets 14,724 10 – Other non-current assets 1,090 – – Operating assets 8,901 1,100 – Cash and cash equivalents 1,380 895 – Provisions and other non-current liabilities –1,107 – – Net debt excluding cash and cash equivalents –5,928 –15 – Operating liabilities –6,846 –439 – Non-controlling interests –8,624 – – Gain/loss on divestment2) 8,366 578 – Compensation received 19,360 2,129 – Less: Cash and cash equivalents in divested companies –1,380 –895 – Impact on Group’s cash and cash equivalents, divestments of Group companies and other operations CF 17,980 1,234 – Add: Divested net debt excluding cash and cash equivalents 5,928 15 – Divestments of Group companies and other operations during the period, including net debt transferred OCF 23,908 1,249 – 1) Divestments in 2024 pertain to the divestment of Vinda, see Note G4 Assets held for sale and discontinued operations on page 173. 2) Excluding reversal of realized translation differences of SEK 775m (–1,102; –) in divested companies that was reclassified to the income statement. Gain/loss on divestment in 2024 is included as part of profit for the period, discontinued operations in the income statement. Gain/loss on divestment in 2023 is included in items affecting comparability in the income statement. Contents 170Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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G. Other G1. Leases Accounting principles AP When a contract is signed it is assessed if the contract is or contains a lease. A contract is or contains a lease if: • it contains an identified asset • Essity is entitled to essentially all economic benefits arising from the use of the identified asset • Essity is entitled to control the use of the asset If any of the above conditions are not met, the contract is not regarded as a lease or containing a lease and is therefore classified as a service contract. On the commencement date of the lease, meaning when the asset becomes available for use by Essity, a right-of-use asset and a financial liability are recognized in the balance sheet. The right-of-use asset is measured at cost and includes the following: • the value of the amount of the lease liability • lease payments made on or before the commencement date, after deductions for any benefits received in conjunction with signing the lease • initial direct fees • an estimate of expenses expected to be paid to restore the asset to the condition as stipulated in the terms of the lease The right-of-use asset is depreciated on a straight-line basis over the shorter period of the asset’s anticipated useful life and the lease term. The lease term is assessed on the basis of the length of the underlying contract taking into consider- ation the cancellation and renewal options. The lease liability is measured at the present value of the following lease payments: • fixed fees, less any incentive receivables • variable lease payments due to an index or rate • amounts expected to be paid in accordance with residual value guarantees • the exercise price for a purchase option, if Essity is reasonably certain of exercising the option • financial penalties to be paid on termination of the lease, if the lease term reflects that Essity will utilize this option Lease payments are normally discounted using Essity’s incremental borrowing rate as the implicit rate of the lease cannot be readily determined in most cases. The incremental borrowing rate used is determined on the basis of the contract currency of the agreement and the length of the lease. The lease liabilities are recognized under the headings Non-current financial liabilities or Current financial liabilities. Lease liabilities are measured at amortized cost according to the effective interest method. The liability is remeasured when future payments are amended by index or by other means, such as a new assessment of future residual value commitments, or the exercise of purchase, renewal or cancellation options. When the lease liability is remeasured as described above, a corresponding adjustment of the value of the right-of-use asset is made. When making lease pay- ments, the contribution is allocated between interest expense and repayment of the lease liability. In the consolidated cash flow statement, payments pertaining to the amortization of the lease liability are recognized in financing activities and payments pertaining to interest expenses are recognized as interest paid. In profit or loss, depreciation of the right-of-use asset is recognized in operating profit while interest expense is recognized in financial expenses. Essity enters into leases on a continuous basis for office buildings, distribution centers and vehicles, such as trucks, forklifts and passenger cars. Lease terms for properties are generally between 3–15 years, while lease terms for vehicles are generally between 3–5 years. Essity also has leases with a shorter lease term than 12 months and leases pertaining to assets of low value, such as office equipment. For these, Essity has chosen to apply the exemption rules in IFRS 16 Leases, meaning the value of these contracts is not part of the right-of-use asset or lease liability. There are no signifi- cant extension periods not taken into account in the lease liability. Key assessments and assumptions KAA Assessments and assumptions must be used when reporting leases in accordance with IFRS 16 Leases. The two most significant assessments concern the length of the lease term and the discount rate to be used. The implicit rate of the leases cannot be readily determined and lease payments are therefore discounted over the expected lease term using Essity’s incremental borrowing rate. The incremental borrowing rate corresponds to what Essity would need to pay to use a loan to finance the purchase of an equivalent asset for a similar duration in the contract currency of the lease. The duration of the lease is determined as the non-cancellable lease term together with periods that may be covered by an option to extend a lease if it is reasonably certain that the contract will be renewed and periods covered by an option to terminate the lease if it is reasonably certain that a possibility to cancel the lease will not be utilized. When assessing if it is reasonably certain that a renewal option or cancellation option will be used, all relevant facts and circumstances that create economic incentives or deterrents are taken into account. The assessment of the lease term is reviewed in cases where facts and circumstances have significantly changed. TG1:1 Right-of-use assets SEKm Properties Vehicles Other Total Lease liabilities Value, January 1, 2024 3,577 348 9 3,934 4,138 Additional right-of-use assets, net 828 310 3 1,141 1,141 Depreciation –846 –238 –5 –1,089 Impairment –1 – – –1 Interest expenses 154 Payments1) –1,223 Translation differences 94 9 – 103 117 Value, December 31 3,652 429 7 4,088 4,327 1) Of which SEK –154m relates to interest payments and SEK –1,069m relates to amortization of the lease liability. In addition to the expenses in the table above, Essity recognized SEK 382m (343; 302) relating to costs for short-term leases, leases of low-value assets and variable lease payments. The total earnings impact of leases, including deprecia- tion, impairment and interest expenses, was SEK 1,625m (1,507; 1,528). Lease payments totaled SEK 1,605m (1,468; 1,413). The maturity structure concerning undiscounted future lease payments during future lease terms is presented in Note E5 Liquidity risk on page 160. Essity has entered into binding leases regarding office properties where the lease term has yet to begin, future lease payments for these contracts are SEK 395m distributed over the next ten years. Contents 171Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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TG1:1 Right-of-use assets SEKm Properties Vehicles Other Total Lease liabilities Value, January 1, 2023 5,038 374 15 5,427 4,281 Assets held for sale –1,540 –9 – –1,549 Liabilities directly attributable to assets held for sale –208 Additional right-of-use assets, net 868 228 3 1,099 1,009 Leases included in acquisitions 3 – – 3 3 Disposals –8 – – –8 –8 Depreciation –808 –244 –9 –1,061 Impairment –2 0 – –2 Reversal of impairment losses 37 – – 37 Interest expenses 138 Payments –1,125 Translation differences –11 –1 – –12 –42 Value, December 31 3,577 348 9 3,934 4,138 TG1:1 Right-of-use assets1) SEKm Properties Vehicles Other Total Lease liabilities Value, January 1, 2022 4,552 372 29 4,953 3,771 Additional right-of-use assets, net 926 186 –3 1,109 1,109 Leases included in acquisitions 139 2 – 141 141 Depreciation –839 –222 –13 –1,074 Impairment –45 – – –45 Interest expenses 107 Payments –1,111 Translation differences 305 36 2 343 264 Value, December 31 5,038 374 15 5,427 4,281 1) Including discontinued operations. G1. Leases, cont. G2. Contingent liabilities and pledged assets Accounting principles AP A contingent liability is recognized when there is a potential or actual obligation arising from past events that is not recognized as a liability or provision, either because it is improbable that an outflow of resources will be required to s ettle the obligation or because the amount cannot be calculated in a reliable manner. Contingent liabilities SEKm 2024 2023 2022 Guarantees for associates 1 1 1 customers and others 57 57 53 Other contingent liabilities 318 333 275 Total 376 391 329 With reference to infringements of competition rules, claims for damages have been brought against the company. The company contests its responsibility and does not expect the claim to have a material impact. Furthermore, claims for early payment of bonds maturing in 2029, 2030 and 2031 have been made against the company in connection with Essity’s sale of shares in Vinda. The company has rejected these claims. G3. Transactions with related parties Essity has dealings with related parties’ shareholdings primarily in joint ventures and joint operations. The transactions occur in the operating activities and mainly consist of the purchase of finished goods for resale and raw materials for use in production based on commercial terms and market prices. Cartografica Galeotti S.p.A. in Italy manufactures and sells handkerchiefs and facial tissues. Essity’s ownership is 33% and was unchanged during the comparative period. Bunzl & Biach GmbH sells recovered paper to Essity. ProNARO GmbH’s main task is to negotiate prices, optimize inventory levels and reduce lead times and costs when purchasing timber. Uni-Charm Mölnlycke BV manufactures and sells incontinence and diaper products to Essity. 40% of the transactions between Uni-Charm Mölnlycke BV and Essity are eliminated as intra-Group transactions and 60% are recognized as external transactions. See also Note F2 Investments in associates and joint ventures on page 167 and Note F3 Joint operations on page 169. External transactions and dealings with significant related parties are presented below. Information on the remuneration of the Board of Directors and senior executives is provided in Note C2 on page 145. Transactions and dealings with related parties 2024 SEKm Cartografica Galeotti Bunzl & Biach ProNARO Uni-Charm Mölnlycke Sales 60 – – – Purchases 18 386 652 1,407 Trade receivables 16 – – 91 Trade payables 7 33 9 145 Transactions and dealings with related parties 2023 SEKm Cartografica Galeotti Bunzl & Biach ProNARO Uni-Charm Mölnlycke Sales 75 – – – Purchases 25 331 824 1,426 Trade receivables 18 – – 77 Trade payables 5 28 19 109 Transactions and dealings with related parties 2022 SEKm Cartografica Galeotti Bunzl & Biach ProNARO Uni-Charm Mölnlycke Sales 126 – – – Purchases 21 455 752 1,367 Trade receivables 49 – – 75 Trade payables 10 41 32 131 Pledged assets Total SEKm Pledged assets related to financial liabilities Other 2024 2023 2022 Real estate mortgages – – – – 21 Other – 191 191 245 295 Total – 191 191 245 316 Liabilities for which some of these assets were pledged as collateral amounted to SEK 191m (200; 199). Contents 172Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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G4. Assets held for sale and discontinued operations Accounting principles AP Assets are classified as held for sale if their value, within one year, will be recovered through a sale and not through continued use in the operations. This means that the assets are presented separately on a line in the balance sheet. On the reclassification date, the assets and liabilities are measured at the lower of fair value minus selling costs and the carrying amount. The assets are no longer depreciated after reclassification. The gain is limited to the amount equivalent to previously made impairment charges. Gains and losses recognized on remeasurement and divestment are recognized in profit or loss for the period. When an asset held for sale represents an independent significant business segment or a significant operation within a geographical area, it is classified as discontinued operations. This means assets and liabilities related to this operation are presented on separate lines in the balance sheet. The divestment date, or the point in time when the operation ful- fills the criteria for classification as held for sale, determines when the operation is classified as discontinued operations. Profit or loss for the period after tax from discontinued operations is recognized on a separate line in the income statement. Internal dealings and transactions between continuing operations and discontinued operations have been eliminated. The income statement is adjusted for the comparative period as though the discontinued operations had already been classified as discontinued operations at the beginning of the comparative period. Profit or loss for the period attributable to discontinued operations was excluded in notes relating to the income statement for comparative years. Public offer for all of the shares in Essity’s former subsidiary Vinda Isola Castle Ltd, a company indirectly wholly owned by Asia Pacific Resources International Limited (APRIL), announced on 15 December 2023 that it intended to make a public offer to the shareholders of Vinda International Holdings Limited (Vinda) for all shares in Vinda. The offer was equivalent to a price of HKD 23.50 per share. Essity supported the offer and signed an irrevocable undertaking to accept the offer for its entire holding of 51.59% shareholding. As of the fourth quarter of 2023, Essity has classified Vinda’s financial reporting as a discontinued operation. The offer was announced on 8 March 2024 and Essity accepted the offer in accordance with its undertaking. The public offer was equivalent to a total value of the shares in Vinda of approximately HKD 28.3 bn (SEK 37.3 bn). On March 21, 2024, Essity announced that the company had completed the sale of all shares in Vinda. The transaction generated cash proceeds to Essity of HKD 14.6 bn (approximately SEK 19 bn). After consultation with legal experts, Essity has determined that the sale of the shares in Vinda does not constitute a "cessation of business" under the terms of outstanding bond loans. On October 17, 2024, Essity announced that it had received a demand for early payment from a few bondholders regarding bonds maturing in 2029, 2030 and 2031. On December 16, 2024, Essity announced that it had received information that some of these investors in some of its Luxembourg-listed bond series had initiated proceedings in English court. The investors’ holdings represent a small portion of the outstanding bonds. Essity still considers the demand to be unfounded. Statement of profit for the period, discontinued operations SEKm 2024 2023 2022 Earnings for the period relating to Vinda 217 279 899 Other earnings attributable to divestment of Vinda 8,798 – – Earnings from discontinued operations 9,015 279 899 Other earnings attributable to divestment of Vinda SEKm 2024 Gain/loss on sale 8,366 Reclassification of realized currency translation differences after tax 748 Transaction costs –227 Impairment of intangible assets in Essity related to Vinda after tax –89 Total 8,798 G5. Events after the balance sheet date On January 22, 2025, Essity announced that Magnus Groth will step down from his position as President and CEO of Essity during 2025. Magnus Groth has a notice period of one year. He will continue as President and CEO of Essity until a successor has been appointed. No other significant events, with impact on the financial statements, have occurred after the balance sheet date. Income statement SEKm 2024 2023 2022 Net sales 4,533 26,770 24,853 Operating expenses –4,261 –26,318 –23,865 Operating profit 272 452 988 Financial items –27 –157 –51 Profit before tax 245 295 937 Income taxes –28 –16 –38 Profit for the period, discontinued operations 217 279 899 Profit from discontinued operations attributable to: Owners of the Parent company 8,919 114 457 Non-controlling interests 96 165 442 Earnings per share from discontinued operations – owners of the Parent company Earnings per share from discontinued operations before and after dilution effects, SEK 12.74 0.16 0.65 Average number of shares before and after dilution, million 700.3 702.3 702.3 Balance sheet SEKm 2023 ASSETS Intangible assets 7,080 Property, plant and equipment 14,300 Financial assets excluding cash and cash equivalents 1 Operating receivables 9,178 Cash and cash equivalents 1,768 Total assets held for sale 32,327 LIABILITIES Financial liabilities 5,508 Operating liabilities 7,283 Deferred tax liabilities 917 Total liabilities directly attributable to assets held for sale 13,708 Net assets held for sale 18,619 Non-controlling interests attributable to discontinued operations 8,145 Net assets held for sale including non-controlling interests attributable to discontinued operations 10,474 Contents 173Essity | Annual Report 2024Financial statements including notes | Financial notes, Group Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Income statement IS SEKm Note 2024 2023 Administrative expenses –1,090 –1,048 Other operating income 688 382 Operating loss PC2 –402 –666 Financial items PC10 Result from participations in Group companies 22,201 4,859 Interest income and similar profit items 691 945 Interest expenses and similar loss items –4,248 –3,317 Total financial items 18,644 2,487 Profit after financial items 18,242 1,821 Appropriations PC4 1 –633 Income taxes PC4 –92 –812 Profit for the period 18,151 376 Statement of comprehensive income SEKm 2024 2023 Profit for the period 18,151 376 Other comprehensive income – – Total comprehensive income 18,151 376 Cash flow statement CF SEKm 2024 2023 Operating activities Profit after financial items 18,242 1,821 Adjustment for non-cash items T:1 –2,127 2,145 Paid tax –385 –110 Cash flow from operating activities before changes in working capital 15,730 3,856 Change in operating receivables1) 1,515 –1,374 Change in operating liabilities1) 1,725 –1,402 Cash flow from operating activities 18,970 1,080 Investing activities Investments in non-current assets –4 –1 Investments in subsidiaries –375 – Cash flow from investing activities –379 –1 Financing activities Proceeds from borrowings – 4,013 Repayment of borrowings –10,923 – Dividend paid –5,443 –5,092 Buyback of own shares –2,225 – Cash flow from financing activities –18,591 –1,079 Cash flow for the period 0 0 Cash and cash equivalents, January 1 0 0 Cash and cash equivalents, December 312) 0 0 Adjustment for non-cash items T:1 2024 2023 Depreciation of non-current assets 2 2 Change in accrued items –2,059 2,124 Change in provisions –70 19 Total –2,127 2,145 1) Dealings of the Parent company with the Swedish Group companies relating to Group contributions and internal tax are recognized as Change in operating receivables or Change in operating liabilities, respectively. 2) The company’s current account is a sub-account and is recognized in the balance sheet as liabilities to Group companies. Supplementary disclosures Interest and dividends paid and received 2024 2023 Dividends received 23,502 3,000 Group contribution received 1,874 641 Group contribution paid –15 –1,468 Interest paid –4,543 –3,811 Interest received 580 504 Total 21,398 –1,134 Financial statements, Parent company Contents 174Essity | Annual Report 2024Financial statements including notes | Financial statements, Parent company Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Change in liabilities attributable to financing activities SEKm Value, January 1 Cash flow Translation difference Value, December 31 Non-current interest-bearing liabilities 29,345 –5,537 378 24,186 Non-current interest-bearing liabilities to Group companies 12,119 11 442 12,572 Current interest-bearing liabilities 12,172 –7,331 –553 4,288 Current interest-bearing liabilities to Group companies 45,283 1,934 – 47,217 Total 98,919 –10,923 267 88,263 Balance sheet BS SEKm Note 2024 2023 Assets Non-current assets Capitalized development costs 0 0 Intangible assets PC5 0 0 Machinery and equipment 12 10 Property, plant and equipment PC6 12 10 Participations in subsidiaries PC7 176,111 175,736 Receivables from Group companies PC8 484 400 Other non-current receivables 253 245 Deferred tax assets PC4 304 393 Financial non-current assets 177,152 176,774 Total non-current assets 177,164 176,784 Current assets Receivables from Group companies PC8 684 2,122 Current tax assets PC4 7 – Other current receivables PC9 79 56 Total current assets 770 2,178 Total assets 177,934 178,962 Balance sheet BS SEKm Note 2024 2023 Equity, provisions and liabilities Equity PC12 Share capital 2,350 2,350 Statutory reserve 0 0 Total restricted equity 2,350 2,350 Retained earnings 63,862 71,154 Profit for the period 18,151 376 Total non-restricted equity 82,013 71,530 Total equity 84,363 73,880 Untaxed reserves PC4 827 828 Provisions Provisions for pensions PC3 761 811 Other provisions 57 69 Total provisions 818 880 Non-current liabilities Liabilities to Group companies PC8 13,691 13,556 Non-current interest-bearing liabilities PC10 24,186 29,345 Total non-current liabilities 37,877 42,901 Current liabilities Liabilities to Group companies PC8 49,268 47,309 Current tax liabilities PC4 – 375 Current interest-bearing liabilities PC10 4,288 12,172 Trade payables 40 45 Other current liabilities PC11 453 572 Total current liabilities 54,049 60,473 Total equity, provisions and liabilities 177,934 178,962 Change in equity (Refer also to Note PC12) SEKm Share capital Statutory reserve Retained earnings and profit/loss for the period Total equity Equity at December 31, 2022 2,350 0 76,246 78,596 Comprehensive income for the period 376 376 Dividend, SEK 7.25 per share –5,092 –5,092 Equity at December 31, 2023 2,350 0 71,530 73,880 Comprehensive income for the period 18,151 18,151 Buyback of own shares –2,225 –2,225 Dividend, SEK 7.75 per share –5,443 –5,443 Equity at December 31, 2024 2,350 0 82,013 84,363 Contents 175Essity | Annual Report 2024Financial statements including notes | Financial statements, Parent company Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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PC. Notes to the Parent company’s financial statements PC1. Basis for preparation of Parent company’s annual accounts The Parent company has prepared its financial statements in accordance with the Swedish Annual Accounts Act (1995:1554) and RFR 2 Accounting for Legal Entities. According to RFR 2, the Parent company is to apply all the IFRS accounting principles adopted by the EU as far as this is possible within the framework of the Swedish Annual Accounts Act. The same accounting principles are usually applied in both the Parent company and the Group. In some cases, the Parent company applies principles other than those used by the Group and, in such cases, these principles are specified under the respective note in the section about the Parent company. PC2. Operating loss Operating profit/loss by type of cost SEKm Note 2024 2023 Other operating income 688 382 Other external costs –730 –580 Personnel and Board costs –358 –466 Depreciation of property, plant and equipment PC6 –2 –2 Total IS –402 –666 The item Other external costs includes primarily consultancy fees, travel expenses, lease expenses and management costs. Auditing expenses SEKm 2024 2023 EY Audit assignments –12 –12 Auditing activities other than the audit assignment –4 –1 Total –16 –13 Leases Accounting principles AP RFR 2 contains an exception allowing all leases to be recognized in profit or loss. Future payment commitments for non-cancellable operating leases are as follows: SEKm 2024 2023 Within 1 year 37 37 Between 2 and 5 years 141 141 Later than 5 years – 35 Total 178 213 Cost for the period for leasing of assets amounted to SEK –42m (–40). Leased assets comprise means of transportation and office premises. PC3. Personnel and Board costs Salaries and remuneration SEKm 2024 2023 Board of Directors1), President, Executive Vice President and senior executives (5 (4)) –103 –101 of which variable remuneration –43 –46 Other employees –147 –182 Total –250 –283 1) Board fees decided by the Annual General Meeting amounted to SEK –11m (–12). For further information, see Notes C1–C4 on pages 145–150. Social security costs SEKm 2024 2023 Total social security costs –94 –176 of which pension costs1) –23 –85 1) Of the Parent company’s pension costs, SEK –24m (–16) pertains to the Board, President, Executive Vice President and senior executives. Former Presi- dents and Executive Vice Presidents and their survivors are also included. The company’s outstanding pension obligations to these individuals amount to SEK 122m (102). Pension costs SEKm 2024 2023 Self-administered pension plans Costs excluding interest expense 26 –38 Interest expense (recognized in personnel costs) –19 –8 Sub-total 7 –46 Retirement through insurance Insurance premiums –39 –33 Other 12 14 Sub-total –20 –65 Policyholder tax 0 0 Special payroll tax on pension costs –2 –17 Cost of credit insurance, etc. –1 –3 Pension costs for the period –23 –85 Premiums during the year for disability and family pension insurance with Alecta amounted to SEK –1m (–1). Premiums for 2025 are expected to amount to SEK 1m, see also Provisions for pensions in this note. Personnel costs also include other personnel costs in the amount of SEK –14m (–7). Average number of employees 2024 2023 Sweden 109 108 of whom women, % 62 62 of whom men, % 38 38 Breakdown of employees by age groups, % 2024 21–30 years 31–40 years 41–50 years 51–60 years 61+ years 7 13 27 40 13 Women comprised 50% (42) of Board members and 31% (31) of senior executives. Contents 176Essity | Annual Report 2024Financial statements including notes | Financial notes, Parent company Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Provisions for pensions Accounting principles AP The Parent company’s provisions for pensions are secured by the regulations in the Pension Obligations Vesting Act (Tryggandelagen) and via endowment insurances. Recognition complies with the simplification rule for defined benefit pension plans in accordance with the voluntary exception in RFR 2 regarding IAS 19. The main difference compared with IAS 19 is that Swedish GAAP disregards future increases in salaries and pensions when calculating the present value of the pension obligation. This present value includes, however, a special reserve for future payments of pension supple- ments indexed for inflation. Both defined contribution and defined benefit plans exist in the Parent company. PRI Pensions Pension liabilities pertaining to PRI pensions have been secured through a common Swedish Essity pension fund. The market value of the Parent company’s portion of the foundation’s assets at December 31, 2024, amounted to SEK 339m (322). In 2024, compensation was received in an amount of SEK 9m (–). The capital value of the pension obligations at December 31, 2024 amounted to SEK 287m (264). Pension payments of SEK –9m (–9) were made in 2024. In 2024, the assets exceeded pension obligations by SEK 52m (58). Other pension obligations The Group’s Note C2 Remuneration of senior executives on page 145 describes the other defined benefit pension plans of the Parent company. The table below shows the change between the years. Capital value of pension obligations relating to self-administered pension plans SEKm 2024 2023 Provisions under Pension Obligations Vesting Act 653 701 Provisions outside the rules of the Pension Obligations Vesting Act 108 110 Value, December 31 BS 761 811 Capital value of pension obligations under the Pension Obligations Vesting Act SEKm 2024 2023 Value, January 1 701 729 Compensation received for assumption of pension obligations 20 – Costs excluding interest expense –26 20 Interest expense (recognized in personnel costs) 17 7 Payment of pensions –59 –55 Value, December 31 BS 653 701 Capital value of pension obligations outside the rules of the Pension Obligations Vesting Act SEKm 2024 2023 Value, January 1 110 99 Costs excluding interest expense 0 18 Interest expense (recognized in personnel costs) 3 1 Payment of pensions –5 –8 Value, December 31 BS 108 110 Out of the total pension liability in 2024 amounting to SEK 761m (811), SEK 108m (110) comprises a direct pension liability secured via endowment insurances. The direct pension liability is not secured in accordance with the Pension Obliga- tions Vesting Act. Endowment insurances are reported as other non-current receivables in the balance sheet. For the remaining portion of the pension liability, external actuaries have carried out capital value calculations pursuant to the provisions of the Pension Obligations Vesting Act. The discount rate is 2.4% (1.0). The defined benefit obligations are calculated based on salary levels valid on the respective balance sheet dates. Next year’s expected payments for the above defined benefit pension plans amount to SEK 59m. PC3. Personnel and Board costs, cont. PC4. Income taxes Accounting principles AP Due to the links between accounting and taxation, the deferred tax liability on untaxed reserves is recognized in the Parent company’s annual accounts as a component of untaxed reserves. Tax expense Tax expense (+), tax income (–) SEKm 2024 2023 Deferred tax 89 421 Current tax 3 391 Total IS 92 812 Explanation of tax expense The difference between the recognized tax expense and expected tax expense is explained below. The expected tax expense is calculated based on profit before tax multiplied by the current tax rate. 2024 2023 Reconciliation SEKm % SEKm % Profit before tax IS 18,243 1,188 Tax expense IS 92 0.5 812 68.3 Expected tax 3,758 20.6 245 20.6 Difference –3,666 –20.1 567 47.7 The difference is due to: Taxes related to prior periods – – 39 3.3 Non-taxable dividends from subsidiaries –4,842 –26.6 –618 –52.1 Non-taxable Group contributions from Group companies1) –2 0.0 –12 –1.0 Non-deductible Group contributions to Group companies1) 362 2.0 480 40.4 Non-deductible interest expenses – – –212 –17.8 Other non-taxable/non-deductible items 816 4.5 890 74.9 Total –3,666 –20.1 567 47.7 1) Non-taxable and non-deductible Group contributions relate to repayment from/to Group companies amounting to 79.4% (79.4) of the Group contribution. The Parent company participates in the Group’s tax pooling arrangement and as of 2021, pays the majority of the Group’s total Swedish taxes. These are recognized as Group contributions paid and received in profit or loss. The net of paid and received Group contributions per Group company amounts to 20.6% (20.6) and represents the respective Group company’s share of the Group’s total tax expense. The gross amounts are recognized as taxable income and deductible expenses and the repayable amounts are recognized as non-taxable income and non-deductible expenses. Contents 177Essity | Annual Report 2024Financial statements including notes | Financial notes, Parent company Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Current tax expense (+), tax income (–) SEKm 2024 2023 Income tax for the period 3 391 Adjustments for prior periods – 0 Total 3 391 Current tax liability (+), tax asset (–) SEKm 2024 2023 Value, January 1 375 94 Current tax expense 3 391 Paid tax –385 –110 Value, December 31 BS –7 375 Deferred tax expense (+), tax income (–) SEKm 2024 2023 Changes in temporary differences 89 382 Adjustments for prior periods – 39 Total 89 421 Deferred tax assets (–) SEKm Value, January 1 Deferred tax income Value, December 31 Provisions for pensions –166 10 –156 Non-current and current receivables from Group companies 82 18 100 Non-current liabilities to Group companies –296 60 –236 Other –13 1 –12 Total BS –393 89 –304 Appropriations and untaxed reserves The Parent company’s untaxed reserves include accumulated depreciation in excess of plan totaling SEK 7m (8) and provisions to tax allocation reserves of SEK 820m (820). PC4. Income taxes, cont. PC6. Property, plant and equipment Equipment SEKm 2024 2023 Accumulated costs 28 24 Accumulated amortization –16 –14 Residual value according to plan 12 10 Value, January 1 10 12 Investments 4 0 Sales and disposals 0 0 Depreciation for the period –2 –2 Value, December 31 BS 12 10 PC5. Intangible assets Capitalized development costs SEKm 2024 2023 Accumulated costs 0 0 Accumulated amortization 0 0 Residual value according to plan 0 0 Value, January 1 0 0 Value, December 31 BS 0 0 PC7. Participations in subsidiaries Accounting principles AP The Parent company recognizes all holdings in subsidiaries at cost after deduction of any accumulated impairment losses. Impairment testing occurs annually. Participations in subsidiaries Subsidiaries SEKm 2024 2023 Accumulated costs 176,987 176,612 Accumulated impairment –876 –876 Carrying amount 176,111 175,736 Value, January 1 175,736 175,736 Investments 375 – Value, December 31 BS TPC7:1 176,111 175,736 In 2024, the Parent company made an unconditional shareholder contribution to Essity Försäkringsaktiebolag amounting to SEK 375m. Contents 178Essity | Annual Report 2024Financial statements including notes | Financial notes, Parent company Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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The Parent company’s holdings of shares and participations in subsidiaries, December 31, 2024 TPC7:1 Company name Corp. Reg. No. Domicile No. of shares Share of equity, % Carrying amount, SEKm Swedish subsidiaries: Fastighets- och Bostadsaktiebolaget FOBOF 556047-8520 Stockholm, Sweden 1,000 100 0 Essity Försäkringsaktiebolag 516401-8540 Stockholm, Sweden 140,000 100 389 Essity TC AB 556643-7298 Stockholm, Sweden 1,000 100 3 Foreign subsidiaries: Essity Group Holding B.V. 33181970 Amsterdam, Netherlands 246,347 100 175,698 Essity Capital B.V. 82525897 Amsterdam, Netherlands 2,000,000 100 21 Total carrying amount of subsidiaries 176,111 German Group companies that are subject to disclosure exemptions The following German companies are fully consolidated by Essity Aktiebolag (Publ) and subject to disclosure exemptions pursuant to SEC. 264 para. 3 of the German Commercial Code (“HGB”). 1. Essity GmbH, domicile in Mannheim, Germany 2. Essity Holding GmbH, domicile in Aschheim, Germany 3. Essity Operations Neuss GmbH, domicile in Neuss, Germany 4. Essity Operations Mannheim GmbH, domicile in Mannheim, Germany 5. Essity Operations Mainz-Kostheim GmbH, domicile in Wiesbaden, Germany 6. Essity Professional Hygiene Germany GmbH, domicile in Mannheim, Germany 7. Essity Germany GmbH, domicile in Mannheim, Germany 8. Essity Operations Witzenhausen GmbH, domicile in Witzenhausen, Germany 9. Essity Hygiene Holding GmbH, domicile in Mannheim, Germany 10. BSN medical GmbH, domicile in Hamburg, Germany 11. BSN medical IP GmbH, domicile in Hamburg, Germany 12. BSN-Jobst GmbH, domicile in Emmerich am Rhein, Germany 13. Essity PLD Germany GmbH, domicile in Mannheim, Germany PC7. Participations in subsidiaries, cont. PC8. Receivables from and liabilities to Group companies Receivables from and liabilities to Group companies SEKm 2024 2023 Non-current assets Derivatives 484 400 Total BS 484 400 Current assets Financial derivatives 101 2 Trade receivables 125 244 Other receivables 458 1,876 Total BS 684 2,122 Non-current liabilities Interest-bearing liabilities 12,572 12,119 Derivatives 1,119 1,437 Total BS 13,691 13,556 Current liabilities Interest-bearing liabilities 47,217 45,283 Financial derivatives 214 1,920 Trade payables 22 29 Other liabilities 1,815 77 Total BS 49,268 47,309 PC9. Other current receivables Other current receivables SEKm 2024 2023 Prepaid expenses and accrued income TPC9:1 65 47 Other receivables 14 9 Total BS 79 56 Prepaid expenses and accrued income TPC9:1 Prepaid lease of premises 10 10 Prepaid financial expenses 26 1 Prepaid user licenses and subscriptions 16 15 Other items 13 21 Total 65 47 Contents 179Essity | Annual Report 2024Financial statements including notes | Financial notes, Parent company Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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PC10. Financial instruments Accounting principles AP The Parent company’s financial instruments are recognized in accordance with the Group’s accounting principles. Refer to Notes E1–E4 on pages 156–159. Hedge accounting was not applied by the Parent company. Financial items SEKm 2024 2023 Result from participations in Group companies Dividends from subsidiaries 23,502 3,000 Group contributions received 455 1,874 Group contributions paid –1,756 –15 Interest income and similar profit items Interest income, external 1 62 Interest income, Group companies 690 883 Interest expenses and similar loss items Interest expenses, external –659 –1,047 Interest expenses, Group companies –3,484 –2,238 Other financial expenses1) –105 –32 Total IS 18,644 2,487 1) The item other financial expenses includes financial fees and exchange rate differences. Exchange rate differences amounted to SEK 4m (2), net. Interest-bearing liabilities Non-current interest-bearing liabilities Carrying amount Fair value SEKm 2024 2023 2024 2023 Bond issues 17,110 22,805 15,338 20,610 Other non-current loans with a term > 1 yr < 5 yrs 7,076 6,540 6,993 6,669 Total BS 24,186 29,345 22,331 27,279 Current interest-bearing liabilities Carrying amount Fair value SEKm 2024 2023 2024 2023 Bond issues 4,288 6,633 4,288 6,633 Loans with maturities of less than one year – 5,539 – 5,539 Total BS 4,288 12,172 4,288 12,172 Bond issues Issued Maturity Carrying amount, SEKm Fair value, SEKm Interest rate % Notes SEK 850m 2025 850 850 0.50 Notes EUR 300m 2025 3,438 3,438 1.13 Upfront fee, Notes EUR 500m 2026 –4 –4 – Notes EUR 500m 2027 5,719 5,591 1.63 Upfront fee, Notes EUR 600m 2029 –13 –11 – Notes EUR 300m 2030 3,418 3,022 0.50 Notes EUR 700m 2031 7,990 6,740 0.25 Total 21,398 19,626 Financial instruments by category Accounting principles AP In 2024, the categories of financial instruments in the Parent company comprise, in accordance with IFRS 9, financial assets and liabilities measured at fair value through profit or loss and amortized cost. All of the Parent company’s finan- cial assets and liabilities measured at fair value through profit or loss are assessed according to measurement level 2. A definition is provided in Note E1 Financial instruments by category and measurement level on page 156. Financial assets measured at amortized cost are continuously reviewed to assess the need for credit loss provisions. If there is a material need for credit loss provisions, a provision is made in accordance with the expected loss model. Contents 180Essity | Annual Report 2024Financial statements including notes | Financial notes, Parent company Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Financial instruments by category SEKm Note 2024 2023 Financial assets measured at fair value through profit or loss Derivatives with Group companies – Non-current financial assets PC8 484 400 Endowment insurances – Other non-current receivables 252 245 Derivatives with Group companies – Current financial assets PC8 101 2 Total 837 647 Financial liabilities measured at fair value through profit or loss Derivatives with Group companies – Non-current financial liabilities PC8 1,119 1,437 Derivatives with Group companies – Current financial liabilities PC8 214 1,920 Total 1,333 3,357 Loan and trade receivables measured at amortized cost Trade receivables with Group companies PC8 125 244 Trade receivables – Other current receivables 0 0 Total 125 244 Financial liabilities measured at amortized cost Non-current interest-bearing liabilities to Group companies PC8 12,572 12,119 Non-current interest-bearing liabilities 24,186 29,345 Current interest-bearing liabilities to Group companies PC8 47,217 45,283 Current interest-bearing liabilities 4,288 12,172 Trade payables to Group companies PC8 22 29 Trade payables 40 45 Other current liabilities to Group companies 58 62 Other current liabilities 184 298 Total 88,567 99,353 The nominal value of the derivatives before the right of set-off is SEK 131,557m (166,636). The nominal value of the derivatives after the right of set-off is SEK 131,557m (166,636). PC11. Other current liabilities Other current liabilities SEKm 2024 2023 Accrued expenses and prepaid income TPC11:1 412 518 Other operating liabilities 41 54 Total BS 453 572 Accrued expenses and prepaid income TPC11:1 SEKm 2024 2023 Accrued interest expenses 184 298 Accrued social security costs 66 73 Accrued vacation pay liability 17 17 Other liabilities to personnel 106 90 Other items 39 40 Total 412 518 PC15. Events after the balance sheet date No significant events, with impact on the financial statements, have occurred after the balance sheet date. PC12. Share capital The change in equity is shown in the financial report relating to Equity presented on page 175. The Parent company was formed in 1988. The share capital and number of shares have increased since the formation via new issues and bonus issue as set out below: YEAR Event No. of shares Increase in share capital Cash payment, SEKm 1988 Number of shares issued in connection with formation 500 0.1 0.1 1995 New issue 1:1, issue price SEK 100 500 0.1 0.1 2016 New issue 1:4, issue price SEK 100 4,000 0.4 0.4 2017 Bonus issue 702,337,489 2,349.9 0.0 2024 Number of shares, December 31, 2024 702,342,489 2,350.4 0.5 The quotient value of the company’s shares amounts to SEK 3.35 (3.35). In 2024, Essity Aktiebolag (publ) repurchased 7,398,000 own Class B shares for a total value of SEK 2,225m. Accordingly, holdings of treasury shares amounted to 7,398,000 shares at year-end. The buybacks are part of the SEK 3bn buyback program announced by Essity on June 17, 2024, which extends for the period June 17, 2024 until the 2025 Annual General Meeting. The holdings of treasury shares corresponded to 1.1% of outstanding shares at December 31, 2024. The repurchased shares are expected to be canceled. PC13. Contingent liabilities and pledged assets Contingent liabilities SEKm 2024 2023 Guarantees for Group companies 16,229 18,583 Other contingent liabilities 21 22 Total 16,250 18,605 Pledged assets SEKm 2024 2023 Endowment insurances 191 245 Total 191 245 PC14. Adoption of the annual accounts The annual accounts are subject to adoption by Essity’s Annual General Meeting and will be presented for approval at the Annual General Meeting on March 27, 2025. PC10. Financial instruments, cont. Contents 181Essity | Annual Report 2024Financial statements including notes | Financial notes, Parent company Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Contents 182Essity | Annual Report 2024 Annual accounts 2024 Disposition of earnings Essity Aktiebolag (publ) Non-restricted equity in the Parent company: retained earnings 63,862,307,344 net profit for the year 18,150,845,487 Total 82,013,152,831 The Board of Directors and the President propose: to distribute to shareholders, a dividend of SEK 8.25 per share 5,733,292,0341) to be carried forward 76,279,860,7972) Total 82,013,152,831 1) Based on the number of shares outstanding, December 31, 2024. The final dividend amount will be based on the number of shares outstanding on the record date, March 31, 2025. 2) The company’s equity would have been SEK 592,566,774 higher if assets and liabilities had not been measured at fair value in accordance with Chapter 4, Section 14a of the Swedish Annual Accounts Act. PC16. Proposed disposition of earnings The Board of Directors and President declare that the consolidated financial statements have been prepared in accordance with the Inter- national Financial Reporting Standards adopted by the EU and that disclosures herein give a true and fair view of the Group’s position and results of operations. The Parent company’s annual accounts have been prepared in accordance with generally accepted accounting principles in Sweden and give a true and fair view of the Parent company’s position and results of operations. The statutory Board of Directors’ Report provides a fair review of the Parent company’s and Group’s operations, position and results of operations and describes material risks and uncertainties facing the Parent company and the companies included in the Group. Stockholm, February 20, 2025 Ewa Björling Board member Maria Carell Board member Annemarie Gardshol Board member Magnus Groth President, CEO and Board member Our audit report was submitted on February 28, 2025 Ernst & Young AB Erik Sandström Authorized Public Accountant Auditor in charge Jan Gurander Chairman Sofia Lafqvist Board member, employee representative Susanna Lind Board member, employee representative Torbjörn Lööf Board member Barbara Milian Thoralfsson Board member Bert Nordberg Board member Örjan Svensson Board member, employee representative Karl Åberg Board member Financial statements including notes | Proposed disposition of earnings Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Auditor’s report To the general meeting of the shareholders of Essity Aktiebolag (publ), corporate identity number 556325-5511 Opinions We have audited the annual accounts and consolidated accounts of Essity Aktiebolag (publ) except for the corporate governance statement on pages 104–113 and the statutory sustainability report on pages 47–103 for the year 2024. The annual accounts and consolidated accounts of the company are included on pages 9–11, 28–46, and 114–186 in this document. In our opinion, the annual accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the parent company as of 31 December 2024 and its financial performance and cash flow for the year then ended in accordance with the Annual Accounts Act. The consolidated accounts have been prepared in accordance with the Annual Accounts Act and present fairly, in all material respects, the financial position of the group as of 31 December 2024 and their financial performance and cash flow for the year then ended in accordance with IFRS Accounting Standards, as adopted by the EU, and the Annual Accounts Act. Our opinions do not cover the corporate governance statement on pages 104–113 and the statutory sustainability report on pages 47–103. The statutory administration report is consistent with the other parts of the annual accounts and consolidated accounts. We therefore recommend that the general meeting of shareholders adopts the income statement and balance sheet for the parent company and the group. Our opinions in this report on the annual accounts and consolidated accounts are consistent with the content of the additional report that has been submitted to the parent company’s audit committee in accordance with the Audit Regulation (537/2014) Article 11. Basis for Opinions We conducted our audit in accordance with International Standards on Auditing (ISA) and generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor’s Responsibilities section. We are independent of the parent company and the group in accordance with professional ethics for accoun- tants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. This includes that, based on the best of our knowledge and belief, no prohibited services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided to the audited company or, where applicable, its parent company or its con- trolled companies within the EU. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions. Key Audit Matters Key audit matters of the audit are those matters that, in our professional judgment, were of most significance in our audit of the annual accounts and consolidated accounts of the current period. These matters were addressed in the context of our audit of, and in forming our opinion thereon, the annual accounts and consolidated accounts as a whole, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of proce- dures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements. Valuation of goodwill and other intangibles assets (trademarks) Description How our audit addressed this key audit matter The value of goodwill and other intangibles (trademarks) with an indefinite useful life as of 31 December 2024 amounted to 55,4 billion SEK. The company performs annual impairment tests as well as whenever impairment indicators have been identified. The recoverable amount for each cash-generating unit is determined as the value in use, which is calculated based on the discounted present value of future cash flows. The impairment tests for 2024 did not result in any impairment write off. Key assumptions in these calculations include future growth rates, gross profit development and the discount rate applied and are presented in Note D1 (“Intangible assets”). An impairment test is a complex process and contains a high degree of judgment regarding future cash flows and other assumptions, not least because it is based on estimates of how the company´s business will be affected by future market developments and by other economic events. In addition, the underlying calcula- tions are in themselves complex. Therefore, we have assessed valuation of goodwill and other intangibles assets with an indefinite useful life to be a key audit matter. In our audit of the fiscal year 2024, we have evaluated the company’s process for preparing impairment tests. We have evaluated and reviewed key assumptions, the application of recognized valuation practices, discount rate and other source data that the company has applied as well as the company’s identification of cash-gene- rating units. We have also evaluated the significant assumptions related to future cash flows and forecasts used in the impairment test by comparing to historical outcome, as well as performing sensitivity analyzes. In order to assess the company´s historical precision in its estimates and assessments we have also evaluated the company´s historical estimates with actual amounts that were subsequently reported. With support from our internal valuation specialists, we have evaluated the valuation methods used. Finally, we have evaluated if disclosures provided in Note D1 (“Intangible assets”) in the company´s notes are appropriate. Report on the annual accounts and consolidated accounts Contents 183Essity | Annual Report 2024Financial statements including notes | Auditor’s report Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Revenue recognition and related sales incentives Description How our audit addressed this key audit matter Accounting for sales incentives (bonuses and rebates) related to revenues is an area with a greater degree of estimation and assessment. Incentives related to sales are reported as reduction of the company´s revenue. We have noted that bonuses, rebates and other adjustments of sales prices in some cases can be material. The com- pany calculates an estimate of final incentives based on the information available the end of the period. We have therefore assessed accounting for sales incentives related to revenues to be a key audit matter. In our audit we have evaluated the company’s process for revenue recognition of related sales incentives (bonuses and rebates). We have also reviewed the accrued costs for sales incentives to customers as of December 31, 2024, which amounted to 7,9 billion SEK against samples of underlying customer agreements and performed analytical procedures. Our audit has also included review of credit invoices and other adjustments to trade receivables that have taken place after Decem- ber 31, 2024. Finally, we have evaluated if disclosures provided in D5 in the company´s notes are appropriate. Other Information than the annual accounts and consolidated accounts This document also contains other information than the annual accounts and consolidated accounts and is found on pages 3–8 and 12–27. The other information also includes the remuneration report and were obtained before the date of this auditor’s report. The Board of Directors and the Managing Director are responsible for this other information. Our opinion on the annual accounts and consolidated accounts does not cover this other information and we do not express any form of assurance conclusion regarding this other information. In connection with our audit of the annual accounts and consolidated accounts, our responsibility is to read the infor- mation identified above and consider whether the information is materially inconsistent with the annual accounts and consolidated accounts. In this procedure we also take into account our knowledge otherwise obtained in the audit and assess whether the information otherwise appears to be materially misstated. If we, based on the work performed concerning this information, conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of the annual accounts and consol- idated accounts and that they give a fair presentation in accordance with the Annual Accounts Act and, concerning the consolidated accounts, in accordance with IFRS Accounting Standards as adopted by the EU. The Board of Directors and the Managing Director are also responsible for such internal control as they determine is necessary to enable the prepa- ration of annual accounts and consolidated accounts that are free from material misstatement, whether due to fraud or error. In preparing the annual accounts and consolidated accounts, The Board of Directors and the Managing Director are responsible for the assessment of the company’s and the group’s ability to continue as a going concern. They disclose, as applicable, matters related to going concern and using the going concern basis of accounting. The going concern basis of accounting is however not applied if the Board of Directors and the Managing Director intends to liquidate the com- pany, to cease operations, or has no realistic alternative but to do so. The Audit Committee shall, without prejudice to the Board of Director’s responsibilities and tasks in general, among other things oversee the company’s financial reporting process. Auditor’s responsibility Our objectives are to obtain reasonable assurance about whether the annual accounts and consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accor- dance with ISAs and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts and consolidated accounts. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the annual accounts and consolidated accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is suffi- cient and appropriate to provide a basis for our opinions. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of the company’s internal control relevant to our audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the com- pany’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Board of Directors and the Managing Director. • Conclude on the appropriateness of the Board of Directors’ and the Managing Director’s use of the going concern basis of accounting in preparing the annual accounts and consolidated accounts. We also draw a conclusion, based on the audit evidence obtained, as to whether any material uncertainty exists related to events or conditions that may cast sig- nificant doubt on the company’s and the group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the annual accounts and consolidated accounts or, if such disclosures are inadequate, to modify our opinion about the annual accounts and consolidated accounts. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company and a group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the annual accounts and consolidated accounts, including the disclosures, and whether the annual accounts and consolidated accounts represent the underlying transactions and events in a manner that achieves fair presentation. • Plan and perform the group audit to obtain sufficient and appropriate audit evidence regarding the financial informa- tion of the entities or business units within the group as a basis for forming an opinion on the consolidated accounts. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our opinions We must inform the Board of Directors of, among other matters, the planned scope and timing of the audit. We must also inform of significant audit findings during our audit, including any significant deficiencies in internal control that we identified. We must also provide the Board of Directors with a statement that we have complied with relevant ethical require- ments regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or related safeguards applied. From the matters communicated with the Board of Directors, we determine those matters that were of most signifi- cance in the audit of the annual accounts and consolidated accounts, including the most important assessed risks for material misstatement, and are therefore the key audit matters. We describe these matters in the auditor’s report unless law or regulation precludes disclosure about the matter. 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Report on other legal and regulatory requirements Report on the audit of the administration and the proposed appropriations of the company’s profit or loss Opinions In addition to our audit of the annual accounts and consolidated accounts, we have also audited the administration of the Board of Directors and the Managing Director of Essity AB (publ) for the year 2024 and the proposed appropriations of the company’s profit or loss. We recommend to the general meeting of shareholders that the profit be appropriated (loss be dealt with) in accor- dance with the proposal in the statutory administration report and that the members of the Board of Directors and the Managing Director be discharged from liability for the financial year. A separate list of loans and collateral has been prepared in accordance with the provisions of the Companies Act. Basis for opinions We conducted the audit in accordance with generally accepted auditing standards in Sweden. Our responsibilities under those standards are further described in the Auditor’s Responsibilities section. We are independent of the parent com- pany and the group in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions. Responsibilities of the Board of Directors and the Managing Director The Board of Directors is responsible for the proposal for appropriations of the company’s profit or loss. At the proposal of a dividend, this includes an assessment of whether the dividend is justifiable considering the requirements which the company’s and the group’s type of operations, size and risks place on the size of the parent company’s and the group’s equity, consolidation requirements, liquidity and position in general. The Board of Directors is responsible for the company’s organization and the administration of the company’s affairs. This includes among other things continuous assessment of the company’s and the group’s financial situation and ensur- ing that the company’s organization is designed so that the accounting, management of assets and the company’s finan- cial affairs otherwise are controlled in a reassuring manner. The Managing Director shall manage the ongoing administra- tion according to the Board of Directors’ guidelines and instructions and among other matters take measures that are necessary to fulfill the company’s accounting in accordance with law and handle the management of assets in a reassuring manner. Auditor’s responsibility Our objective concerning the audit of the administration, and thereby our opinion about discharge from liability, is to obtain audit evidence to assess with a reasonable degree of assurance whether any member of the Board of Directors or the Managing Director in any material respect: • has undertaken any action or been guilty of any omission which can give rise to liability to the company, or • in any other way has acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. Our objective concerning the audit of the proposed appropriations of the company’s profit or loss, and thereby our opinion about this, is to assess with reasonable degree of assurance whether the proposal is in accordance with the Companies Act. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Sweden will always detect actions or omissions that can give rise to liability to the company, or that the proposed appropriations of the company’s profit or loss are not in accordance with the Companies Act. The auditor’s examination of the ESEF report Opinion In addition to our audit of the annual accounts and consolidated accounts, we have also examined that the Board of Directors and the Managing Director have prepared the annual accounts and consolidated accounts in a format that enables uniform electronic reporting (the Esef report) pursuant to Chapter 16, Section 4(a) of the Swedish Securities Market Act (2007:528) for Essity Aktiebolag (publ) for the financial year 2024. Our examination and our opinion relate only to the statutory requirements. In our opinion, the ESEF report has been prepared in a format that, in all material respects, enables uniform electronic reporting. Basis for opinion We have performed the examination in accordance with FAR’s recommendation RevR 18 Examination of the ESEF report. Our responsibility under this recommendation is described in more detail in the Auditors’ responsibility section. We are independent of Essity Aktiebolag (publ) in accordance with professional ethics for accountants in Sweden and have otherwise fulfilled our ethical responsibilities in accordance with these requirements. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of the Board of Directors and the Managing Director The Board of Directors and the Managing Director are responsible for the preparation of the Esef report in accordance with Chapter 16, Section 4(a) of the Swedish Securities Market Act (2007:528), and for such internal control that the Board of Directors and the Managing Director determine is necessary to prepare the Esef report without material misstatements, whether due to fraud or error. As part of an audit in accordance with generally accepted auditing standards in Sweden, we exercise professional judgment and maintain professional scepticism throughout the audit. The examination of the administration and the proposed appropriations of the company’s profit or loss is based primarily on the audit of the accounts. Additional audit procedures performed are based on our professional judgment with starting point in risk and materiality. This means that we focus the examination on such actions, areas and relationships that are material for the operations and where devia- tions and violations would have particular importance for the company’s situation. We examine and test decisions under- taken, support for decisions, actions taken and other circumstances that are relevant to our opinion concerning dis- charge from liability. As a basis for our opinion on the Board of Directors’ proposed appropriations of the company’s profit or loss we examined the Board of Directors’ reasoned statement and a selection of supporting evidence in order to be able to assess whether the proposal is in accordance with the Companies Act. 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The auditor´s opinion regarding the statutory sustainability report The Board of Directors is responsible for the statutory sustainability report on pages 47–103, and that it is prepared in accordance with the Annual Accounts Act according to the prior wording that was in effect before 1 July 2024 Our examination has been conducted in accordance with FAR’s auditing standard RevR 12 The auditor´s opinion regarding the statutory sustainability report. This means that our examination of the statutory sustainability report is different and substantially less in scope than an audit conducted in accordance with International Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinion. A statutory sustainability report has been prepared. Ernst & Young AB, with Erik Sandström as auditor-in charge, Box 7850, 103 99 Stockholm, was appointed auditor of Essity Aktiebolag (publ) by the general meeting of the shareholders on the 21 March 2024 and has been the company’s auditor since the 27 May 2016. Stockholm 28 February 2025 Ernst & Young AB Erik Sandström Authorized Public Accountant The auditor’s examination of the corporate governance statement The Board of Directors is responsible for that the corporate governance statement on pages 104–113 has been prepared in accordance with the Annual Accounts Act. Our examination of the corporate governance statement is conducted in accordance with FAR´s standard RevR 16 The auditor´s examination of the corporate governance statement. This means that our examination of the corporate governance statement is different and substantially less in scope than an audit conducted in accordance with Interna- tional Standards on Auditing and generally accepted auditing standards in Sweden. We believe that the examination has provided us with sufficient basis for our opinions. A corporate governance statement has been prepared. Disclosures in accordance with chapter 6 section 6 the second paragraph points 2–6 of the Annual Accounts Act and chapter 7 section 31 the second paragraph the same law are consistent with the other parts of the annual accounts and consolidated accounts and are in accordance with the Annual Accounts Act. Auditor’s responsibility Our responsibility is to obtain reasonable assurance whether the Esef report is in all material respects prepared in a format that meets the requirements of Chapter 16, Section 4(a) of the Swedish Securities Market Act (2007:528), based on the procedures performed. RevR 18 requires us to plan and execute procedures to achieve reasonable assurance that the Esef report is prepared in a format that meets these requirements. Reasonable assurance is a high level of assurance, but it is not a guarantee that an engagement carried out according to RevR 18 and generally accepted auditing standards in Sweden will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Esef report. The audit firm applies ISQM 1 Quality Management for Firms that Perform Audits or Reviews of Financial Statements, or other Assurance or Related Services Engagements which requires the firm to design, implement and operate a system of quality management, including policies and procedures regarding compliance with professional ethical requirements, professional standards and applicable legal and regulatory requirements. The examination involves obtaining evidence, through various procedures, that the Esef report has been prepared in a format that enables uniform electronic reporting of the annual and consolidated accounts. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement in the report, whether due to fraud or error. In carrying out this risk assessment, and in order to design audit procedures that are appropriate in the circumstances, the auditor considers those elements of internal control that are relevant to the preparation of the Esef report by the Board of Directors and the Managing Director, but not for the purpose of expressing an opinion on the effectiveness of those internal controls. The examination also includes an evaluation of the appropriateness and reason- ableness of assumptions made by the Board of Directors and the Managing Director. The procedures mainly include a validation that the Esef report has been prepared in a valid XHMTL format and a reconciliation of the Esef report with the audited annual accounts and consolidated accounts. Furthermore, the procedures also include an assessment of whether the consolidated statement of financial perfor- mance, financial position, changes in equity, cash flow and disclosures in the Esef report have been marked with iXBRL in accordance with what follows from the Esef regulation. Contents 186Essity | Annual Report 2024Financial statements including notes | Auditor’s report Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Contents Financial statements, Group Financial notes, Group Financial statements, Parent company Financial notes, Parent company Proposed disposition of earnings Auditor’s report Other information
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Contents 187Essity | Annual Report 2024 Description of costs Raw materials Other information | Description of costs and Raw materials Group Health & Medical Pulp consumption Recovered paper consumption Consumer Goods Professional Hygiene Of which Pulp 11% Recovered paper 3% Super absorbents 2% Non-woven 2% Other4) 18% Total raw materials and consumables 36% Of which Pulp 16% Recovered paper 2% Super absorbents 2% Non-woven 2% Other4) 20% Total raw materials and consumables 42% Of which Pulp 6% Non-woven 5% Super absorbents 4% Other4) 15% Total raw materials and consumables 30% Of which Recovered paper 8% Pulp 6% Other4) 17% Total raw materials and consumables 31% 1) Excluding items affecting comparability and profit from associates and joint ventures. 2) Sales, general and administration includes costs for marketing of 6 percentage points. 3) The two largest items of Other costs of goods sold comprise personnel (12 percentage points) and depreciation/amortization (3 percentage points). 4) The item Other in raw materials and consumables includes costs for chemicals, packaging material and plastic material. Råvaror Massa Consumer Goods, 81% Professional Hygiene , 13% Health & Medical, 6 % Professional Hygiene, 63% Consumer Goods, 37% Råvaror Returpapper 1.9 million tons Essity’s own pulp production corresponded to 9% of the pulp consumption and is primarily related to an integrated tissue plant in Mannheim, Germany. 1.6 million tons Sales, general and administration 2) , 22% Energy , 5% Transport and distribution expenses, 12% Other costs of goods sold 3) , 25% Raw materials and consumables, 36% Total operating expenses 1): SEK 126,390m Group Consumer goods Sales, general and administration, 19% Energy , 7% Transport and distribution expenses, 11% Other costs of goods sold, 21% Raw materials and consumables, 42% Total operating expenses 1): SEK 69,715m Health & Medical Sales, general and administration, 31% Energy , 1% Transport and distribution expenses, 13% Other costs of goods sold, 25% Raw materials and consumables, 30% Total operating expenses 1): SEK 23,931m Professional hygiene Sales, general and administration, 17% Energy , 6% Transport and distribution expenses, 12% Other costs of goods sold, 34% Raw materials and consumables, 31% Total operating expenses 1): SEK 31,253m Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information Description of costs and Raw materials Production facilities Financial multi-year summary Calendar and contact points
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! 1) At December 31, 2024. 2) Non-woven production. Production facilities Capacity is stated in thousands of tons, unless otherwise indicated, and per year. Country/Region Production facility1) Tissue capacity Argentina Buenos Aires Australia Springvale Austria Ortmann 132 Belgium Stembert 75 Brazil Jarinu Canada Drummondville Chile Santiago 28 Colombia Cajica 70 Colombia Cali Colombia Caloto Colombia Medellin 30 Colombia Rio Negro Dominican Republic San Cristobal Ecuador Inpaecsa 15 Ecuador Lasso 26 Egypt Cairo Fiji Islands Fiji Finland Nokia 42 France Gien 145 France Hondouville 55 France Kunheim 52 France Le Theil 65 France Radiante France Vibraye Germany Emmerich Germany Hausbruch Germany Kostheim 127 Germany Mannheim 283 Germany Neuss 112 Germany Witzenhausen 32 India Goa Italy Altopascio 25 Italy Collodi 42 Italy Lucca 100 Jordan Amman Mexico Ecatepec Mexico Monterrey 80 Mexico Reynosa Mexico Sahagun 95 Mexico Uruapan 40 Netherlands Assen Netherlands Cuijk 52 Netherlands Gennep Netherlands Hoogezand Country/Region Production facility1) Tissue capacity Netherlands Suameer2) 9 New Zealand Kawerau 60 Pakistan Karachi Poland Olawa Slovakia Gemerská Hôrka South Africa Pinetown Spain Allo 120 Spain Telde Spain Valls 137 Sweden Askersund Sweden Falkenberg Sweden Lilla Edet 100 Sweden Mölnlycke Country/Region Production facility1) Tissue capacity UK Manchester 50 UK Oakenholt 45 UK Prudhoe 94 UK Skelmersdale UK Stubbins 55 USA Barton 180 USA Bordentown USA Bowling Green USA Harrodsburg 55 USA Manchester (CT) USA Menasha 170 USA Middletown 100 USA Neenah Total 2,898 Contents 188Essity | Annual Report 2024Other information | Production facilities Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information Description of costs and Raw materials Production facilities Financial multi-year summary Calendar and contact points
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Contents 189Essity | Annual Report 2024 Financial multi-year summary SEKm 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 INCOME STATEMENT1) Net sales 145,546 147,147 131,320 101,466 121,752 128,975 118,500 109,265 101,238 98,519 EBITA excl. IAC 20,344 18,898 12,047 11,451 17,626 15,840 12,935 13,405 11,992 10,603 Health & Medical 5,509 4,037 2,904 3,800 3,668 3,734 Consumer Goods 9,509 9,797 6,354 5,767 11,538 8,333 Professional Hygiene 6,829 6,288 3,843 2,673 3,317 4,463 Other operations –1,503 –1,224 –1,054 –789 –897 –690 –591 –620 –577 –737 Items affecting comparability (IAC) –869 –2,291 –2,171 371 –59 –713 –1,375 –855 –2,645 –292 EBITA 19,475 16,607 9,876 11,822 17,567 15,127 11,560 12,550 9,347 10,3112) Amortization of acquisition-related intangible assets –1,110 –1,109 –1,111 –844 –809 –778 –732 –560 –159 –133 Items affecting comparability (IAC) –70 –350 –274 – – – –69 –85 –180 –494 Operating profit 18,295 15,148 8,491 10,978 16,758 14,349 10,759 11,905 9,008 9,684 Financial income 593 412 141 81 108 106 91 158 202 3123) Financial expenses –2,524 –2,768 –1,461 –648 –1,066 –1,415 –1,248 –1,340 –1,037 –1,140 Profit before tax 16,364 12,792 7,171 10,411 15,800 13,040 9,602 10,723 8,173 8,856 Income taxes –4,331 –3,275 –2,006 –2,398 –4,053 –2,828 –1,050 –1,938 –3,931 –2,278 Profit for the period 12,033 9,517 5,165 8,013 11,747 10,212 8,552 8,785 4,242 6,578 BALANCE SHEET Non-current assets (excluding financial receivables) 117,772 112,913 137,492 122,196 107,974 116,779 110,370 105,398 77,238 67,483 Receivables and inventories 48,605 44,146 61,791 45,949 37,141 38,486 38,646 34,664 29,917 29,171 Non-current assets held for sale – – – – – 42 69 42 156 120 Financial receivables 2,603 3,189 2,088 1,851 3,555 3,535 1,751 1,700 1,052 766 Current financial assets 5,342 5,259 4,941 1,150 993 525 422 1,105 1,677 12,983 Cash and cash equivalents 10,962 5,159 4,288 3,904 4,982 2,928 3,008 4,107 4,244 4,828 Assets held for sale, discontinued operations – 32,327 – – – – – – – – Total assets 185,284 202,993 210,600 175,050 154,645 162,295 154,266 147,016 114,284 115,351 Equity 88,314 70,846 67,346 59,874 54,352 54,125 47,141 42,289 33,204 42,986 Non-controlling interests 427 8,559 9,218 8,633 8,990 8,676 7,758 7,281 6,376 5,289 Provisions 11,440 11,396 13,097 12,855 12,671 14,017 15,696 14,659 11,961 8,450 Interest-bearing debt 47,098 60,984 71,515 58,189 46,890 52,062 54,327 54,838 36,873 34,717 Operating and other non-interest bearing liabilities 38,005 37,500 49,424 35,499 31,742 33,415 29,344 27,949 25,870 23,909 Liabilities directly attributable to assets held for sale – 13,708 – – – – – – – – Total equity and liabilities 185,284 202,993 210,600 175,050 154,645 162,295 154,266 147,016 114,284 115,351 Average capital employed 115,346 115,105 110,727 92,227 112,473 114,663 107,575 90,167 73,145 70,115 Net debt, including pension liabilities 30,769 53,703 62,869 55,433 42,688 50,940 54,404 52,467 35,173 19,058 1) Income statement and operating cash flow statement for the 2021–2024 period refer to continuing operations. 2) 2015 includes the sale of securities, SEK 970m. 3) 2015 does not include the sale of securities, SEK 970m. Other information | Financial multi-year summary Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information Description of costs and Raw materials Production facilities Financial multi-year summary Calendar and contact points
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Contents 190Essity | Annual Report 2024 SEKm 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 OPERATING CASH FLOW STATEMENT 1) Operating cash flow 17,242 17,685 7,680 9,744 16,018 15,639 9,900 10,622 10,998 8,261 Cash flow from current operations 9,485 11,625 4,088 5,991 11,175 13,208 6,363 6,644 6,530 5,371 Cash flow before transactions with shareholders 33,325 12,692 –867 –5,807 10,795 13,285 5,737 –19,372 359 5,328 Investments in non-current assets, net –7,332 –6,819 –5,362 –5,182 –6,439 –5,707 –6,781 –6,012 –6,255 –5,472 Acquisitions of Group companies and other operations –68 –182 –4,955 –11,813 –747 –143 –694 –26,045 –6,540 –92 Divestments of Group companies and other operations 23,908 1,249 – 15 367 220 68 29 369 49 KEY FIGURES Equity/assets ratio, % 48 35 32 34 35 33 31 29 29 37 Interest coverage ratio 4) 9.5 6.4 6.4 19.4 17.5 11.0 9.3 10.1 10.8 11.7 Debt payment capacity, including pension liabilities, %4) 59 34 24 26 46 38 25 26 29 65 Debt/equity ratio, including pension liabilities 0.35 0.68 0.82 0.81 0.67 0.81 0.99 1.06 0.89 0.39 Debt/equity ratio, excluding pension liabilities 0.35 0.68 0.81 0.77 0.63 0.76 0.92 0.99 0.76 0.34 ROCE, %4) 16.9 14.4 8.9 12.8 15.6 13.2 10.8 13.9 12.8 13.8 ROCE excl. IAC, %4) 17.6 16.4 10.9 12.4 15.7 13.8 12.0 14.9 16.4 15.1 ROE, % 25.2 12.5 8.1 15.0 18.2 17.4 16.1 19.8 9.3 13.9 EBITA margin, %4) 13.4 11.3 7.5 11.7 14.4 11.7 9.8 11.5 9.2 10.5 EBITA margin excl. IAC, %4) 14.0 12.8 9.2 11.3 14.5 12.3 10.9 12.3 11.8 10.8 Operating margin, %4) 12.6 10.3 6.5 10.8 13.8 11.1 9.1 10.9 8.9 9.8 Operating margin excl. IAC, %4) 13.2 12.1 8.3 10.5 13.8 11.7 10.3 11.8 11.7 10.6 Net margin, %4) 8.3 6.5 4.0 7.8 9.7 7.9 7.2 8.0 4.2 6.7 Capital turnover rate4) 1.26 1.28 1.19 1.10 1.08 1.12 1.1 1.21 1.38 1.41 Cash flow from current operations per share, SEK4) 13.54 16.55 5.82 8.53 15.91 18.81 9.06 9.46 9.30 7.65 Earnings per share, SEK 29.83 13.60 7.93 12.27 14.56 13.12 11.23 11.56 5.41 8.73 Dividend per share, SEK 8.255) 7.75 7.25 7.00 6.75 6.25 5.75 5.75 4) The key figure for the 2021–2024 period refers to continuing operations. 5) Board of Directors’ dividend proposal. Financial multi-year summary, cont. Other information | Financial multi-year summary Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information Description of costs and Raw materials Production facilities Financial multi-year summary Calendar and contact points
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Contents 191Essity | Annual Report 2024 This Annual Report was produced by Essity in collaboration with Hallvarsson & Halvarson. Photos: Juliana Fälldin, Lena Granefelt, Peter Hoelstad, Maria Fernanda Anzola and Essity. Printing: ÅTTA45 2025. Follow Essity: Annual General Meeting on March 27, 2025 Essity’s Annual General Meeting will be held on Thursday, March 27, 2025. For further information about the 2025 Annual General Meeting, see essity.com. Contact points Investor Relations: Sandra Åberg Tel: +46 70 564 96 89 E-mail: ir@essity.com Public Relations: Per Lorentz Tel: +46 08 788 52 20 E-mail: media@essity.com Nomination Committee and Board of Directors: Essity Aktiebolag (publ) Secretary to the Nomination Committee and Board of Directors – Mikael Schmidt, General Counsel PO Box 200 SE-101 23 Stockholm, Sweden E-mail: info@essity.com Essity Aktiebolag (publ) PO Box 200, SE-101 23 Stockholm, Sweden Visiting address: Klarabergsviadukten 63 Tel: +46 8 788 51 00 Corp. Reg. No.: 556325-5511 Essity’s Nomination Committee • Helena Stjernholm, AB Industrivärden, the Chairman of the Nomination Committee • Anders Hansson, AMF and AMF Funds • Marianne Nilsson, Swedbank Robur Funds • Anders Jonsson, Livförsäkringsbolaget Skandia • Jan Gurander, Chairman of the Board of Essity The Nomination Committee prepares, among other things, the proposal for election of Board members. For further information, refer to the Corporate governance report on pages 104–113. Financial information 2025–2026 Annual General Meeting 2025 March 27, 2025 Interim report, quarter 1 2025 April 24, 2025 Interim report, quarter 2 2025 July 17, 2025 Interim report, quarter 3 2025 October 23, 2025 Report for quarter 4 and full-year 2025 January 22, 2026 Annual Report 2025 Feb/March 2026 Annual reports and financial statements are published in Swedish and English (in the event of differences between the English translation and the Swedish original, the Swedish text shall prevail) and can be downloaded from, or subscribed for, on essity.com. Calendar and contact points Other information | Calendar and contact points Introduction The Essity share Strategy Business areas Group Sustainability statements Corporate governance report Financial statements including notes Other information Description of costs and Raw materials Production facilities Financial multi-year summary Calendar and contact points
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Breaking Barriers to Well-being Essity is a global, leading hygiene and health company. Every day, our products, solutions and services are used by a billion people around the world. Our purpose is to break barriers to well-being for the benefit of consumers, patients, caregivers, customers and society. Sales are conducted in approximately 150 countries under the leading global brands TENA and Tork, and other strong brands such as Actimove, Cutimed, JOBST, Knix, Leukoplast, Libero, Libresse, Lotus, Modibodi, Nosotras, Saba, Tempo, TOM Organic and Zewa. In 2024, Essity had net sales of approximately SEK 146bn (EUR 13bn) and employed 36,000 people. The company’s headquarters is located in Stockholm, Sweden and Essity is listed on Nasdaq Stockholm. More information at essity.com and follow Essity on social media Essity Aktiebolag (publ) PO Box 200, SE-101 23 Stockholm, Sweden Visiting address: Klarabergsviadukten 63 Tel +46 8 788 51 00 Corp. Reg. No.: 556325-5511