Essity is a wide-moat hygiene & health leader — TENA incontinence, Tork professional, Libresse/Bodyform — with leading positions in ~90% of branded sales, global scale and distribution density in essential, recurring categories. FY2025 EBITA margin excl. items was 14.1% (best in five years; target >15%). Adjusted ROIC ~13% on an 8% WACC produces +SEK 5.2bn economic profit.
Earnings swing on pulp/energy input costs and heavy FX translation (a strong SEK cut Q1 reported sales −5.1% despite +0.4% organic and +5% ex-FX EBITA). Capital allocation is disciplined: dividend SEK 8.75 (+52% since 2018), recurring ~SEK 3bn buyback, net-debt/EBITDA ~1.0x, the Edgewell feminine-care bolt-on, and the clean 2024 Vinda (China) divestment. But at EV/IC ~1.9x / PEBV ~1.2 the quality is priced, leaving limited margin of safety.
The reverse-DCF base sits near today's SEK 256 (PEBV ~1.2, EV/IC ~1.9x, ~5.5% FCF yield) — a fully-valued wide-moat compounder; a SEK 5.5bn pension surplus adds an IC-sensitivity wrinkle.
Base SEK 265 on the margin ramp toward the >15% target; bull SEK 295 if pulp/FX turn favourable and the >15% margin is achieved; bear SEK 220 on a pulp/energy cost spike or demand softness.
The market pays today’s enterprise value for roughly 1.7% NOPAT growth over 5 years. The business earns 13% on capital against a 8% cost of capital (spread +4.9 pp); the no-growth value is SEK 245/share (96% of price), so the rest is priced-in growth.
| Scenario | 24m target | Impl. g | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | SEK 295 | +7% | +15% | 30% | Pulp/FX favourable; >15% margin target achieved |
| Base | SEK 265 | +3% | +4% | 45% | Margin ramp continues; fully valued |
| Bear | SEK 220 | -4% | -14% | 25% | Pulp/energy cost spike or demand softness |
| Prob-weighted | SEK 263 | — | +3% | 100% | Scenario-weighted expected value |
| WACC \ g | 0% | 3% | 5% | 8% | 10% | 15% |
|---|---|---|---|---|---|---|
| 6.50% | 346 | 380 | 405 | 444 | 472 | 548 |
| 7.25% | 288 | 313 | 332 | 360 | 381 | 435 |
| 8.00% (base) | 245 | 265 | 278 | 300 | 314 | 353 |
| 8.75% | 213 | 228 | 238 | 254 | 264 | 292 |
| 9.50% | 188 | 199 | 206 | 218 | 225 | 244 |
Green = fair value above the current price of SEK 255.90. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.
⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.
Leading ~90% branded positions; 14.1% EBITA margin (best in 5yr), target >15%.
Adjusted ROIC ~13% vs 8% WACC, EP +SEK 5.2bn — genuine value creation.
Dividend +52% since 2018, ~SEK 3bn buyback, ND/EBITDA ~1.0x.
Edgewell bolt-on + clean Vinda divestment — disciplined capital allocation.
Essity is a genuinely wide-moat, above-WACC consumer-staples compounder with a credible margin ramp, but fully valued at EV/IC ~1.9x. HOLD, medium conviction; base SEK 265.
Accumulate on a pulp/FX-driven pullback; the >15% margin target and shareholder returns underpin the long-term case.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open
| Adjustment / figure | Value | Source | Why mttssn treats it this way |
|---|---|---|---|
| Revenue (net sales) | 138,494 | B1, B2 / Consolidated income statement 📄 p.112 | FY2025 net sales, continuing operations, top line of the consolidated income statement. LTM revenue 136,695 = FY 138,494 + Q1 2026 33,177 - Q1 2025 34,976. |
| EBITA (excl. IAC) | 19,572 | Consolidated income statement 📄 p.112 | Operating profit before amortization of acquisition-related intangibles (EBITA), excl. IAC - Essity's headline profit measure. Reported EBITA 19,503; the +69 difference is the IAC removed. |
| Operating profit / EBIT | 18,531 | Consolidated income statement 📄 p.112 | FY2025 operating profit (EBIT), continuing operations, after PPA amortization of acquisition-related intangibles. EBIT excl. IAC = 18,600. LTM EBIT 18,245. |
| Goodwill | 36,861 | Note D1 (BS) 📄 p.113 | Goodwill carrying value Dec 31, 2025 on the consolidated balance sheet; decline from 41,138 is almost all translation differences (-4,277), no impairment. Q1 2026: 38,804 (post-Edgewell). |
| Brand / trademark intangibles | 13,194 | Note D1 - Intangible assets 📄 p.148 | Trademarks carrying value Dec 31, 2025 (TENA 7,446 Health & Medical, Libresse etc. 5,679 Consumer Goods, Tork 69 Professional Hygiene). Mostly indefinite-life, tested for impairment not amortized. Total intangibles incl. customer relations/technologies + emission allowances = 18,273. |
| PPA amortization (acquisition-related intangibles) | -972 | Note B3 / Consolidated income statement 📄 p.112 | FY2025 amortization of acquisition-related intangible assets, separate IS line, excluded from Essity EBITA but KEPT in opex by mttssn. By segment: Health & Medical -731, Consumer Goods -221, Professional Hygiene -21, Other +1. LTM -961. |
| Items affecting comparability (IAC) in EBIT | -69 | Note B2 - TB2:1 📄 p.128 | FY2025 total IAC hitting operating profit: cost of goods sold -21, SG&A -48, acquisition-related amortization 0 = -69. Unusually small year. LTM IAC -263 (Q1 2026 -162, Q1 2025 +32). Removed in our normalization. |
| Non-controlling interests (equity) | 415 | Note E8 / EQ (BS equity) 📄 p.113 | NCI within total equity Dec 31, 2025 (total equity 86,040; owners of parent 85,625). Collapsed from 8,559 in 2023 after the Vinda divestment. Q1 2026 NCI 446. Tracked for PEBV; does not adjust IC. |
| Lease liabilities | 3,958 | Note G1 (and E4) 📄 p.167 | Total lease liabilities Dec 31, 2025 = non-current 2,983 + current 975 (Note E4) = 3,958, reconciled in the ROU roll-forward (Note G1). ROU assets 3,753. EXCLUDED from IC (only ~2% of total assets; offices/DCs/vehicles). Used as Q1 2026 proxy. |
| Interest-bearing debt (ex-leases) | 38,353 | Consolidated balance sheet (Q1 2026) 📄 p.14 | Q1 2026 (Mar 31, 2026) total financial liabilities 42,311 = non-current 26,331 + current 15,980, less lease liabilities 3,958 = 38,353 of interest-bearing debt used in IC. FY2025 equivalent: 38,632 total financial liabilities (bonds, commercial paper, bank loans, derivatives + leases). |
| Cash and cash equivalents | 10,741 | Consolidated balance sheet (Q1 2026) 📄 p.14 | Cash Mar 31, 2026. Operational cash held = 2% of revenue = 2,734; excess cash 8,007 removed from IC. FY2025 year-end cash 8,487. |
| Total equity | 88,161 | Consolidated balance sheet (Q1 2026) 📄 p.14 | Total equity Mar 31, 2026 (owners of parent 87,715 + NCI 446). Reserves line 7,490 = accumulated OCI (translation + hedge + FVOCI), stripped out: equity_ex_oci = 80,671. FY2025 year-end total equity 86,040. |
| Income tax expense | -4,443 | Note B5 / Consolidated income statement 📄 p.112 | FY2025 income taxes, continuing operations (PBT 17,161 -> effective rate 25.9%). LTM tax -4,459 on LTM PBT 16,995 -> effective rate 26.24% used for NOPAT. Q1 2026 tax -1,041, Q1 2025 -1,025. |
How the mttssn view has evolved — each prior dated note is preserved.