Essity AB Class B

ESSITY B: XSTO (SWE)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	SEK 446.00	Dlgnb	Kfvpcsn

Essity Earnings: Commoditized Consumer Tissue Business Is Hindering Margin Improvement

Diana Radu

Jul 20, 2023

No-moat Essity’s second-quarter results disappointed investors, with the share price falling by around 10% in early trading. The adjusted EBIT of SEK 4.4 billion reported for the second quarter was below FactSet consensus of SEK 4.8 billion, hit by salary inflation and higher marketing costs in the consumer goods segment. Our full-year forecast was already lower than consensus; therefore, the update does not affect our fair value estimate of SEK 260. We view shares as fairly valued at this time.

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