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mttssn research · Nordic Deep Dive
Essity A (ESSITY-A.ST)
Consumer Staples · Global hygiene & health (A-share, voting) · LTM Q1 2026
Analysis date: 2026-06-15
Price at analysis: SEK 258.70
Method: mttssn_streamlined_v1
Conviction: MEDIUM
HOLD
Conviction: MEDIUM
Essity A-share — identical economic exposure to ESSITY-B.ST (TENA, Tork, Libresse). The A-share carries one vote vs B-share's one-tenth vote, trading at a small premium (~SEK 258.7 vs B at SEK 255.9). Same wide-moat thesis: adj ROIC ~13%, EP +SEK 5.2bn, 14.1% EBITA margin, fully valued at EV/IC ~1.9x. HOLD, medium conviction. Base SEK 275.
Adj. ROIC
12.9%
WACC 8% → spread +4.9pp
Economic Profit
+SEK 5,213M
+SEK 5.2bn; ROIC ~13% clears 8% cost of capital
FCF Yield
5.4%
~5.5% FCF yield; ~SEK 3bn buyback
Price / Target
SEK 259 → SEK 275
+6% base; HOLD
Revenue (LTM)
SEK 136.7B
LTM; Q1 −5.1% reported on FX, +0.4% organic
EBIT Margin
13.3%
14.1% EBITA margin (best in 5yr)
EV / IC
1.92×
Enterprise value / invested capital
Net Debt
n/a
Net debt/EBITDA ~1.0x
Thesis

Same thesis as ESSITY-B.ST. Essity is a wide-moat hygiene & health leader with TENA incontinence, Tork professional, and Libresse/Bodyform — leading positions in ~90% of branded sales. FY2025 EBITA margin 14.1% (best in five years; target >15%); adj ROIC ~13% on 8% WACC = EP +SEK 5.2bn.

The A-share (ESSITY-A.ST) carries one vote per share vs the B-share's one-tenth vote. The voting premium is structurally small for Essity as the ownership is widely held with no controlling shareholder exercising voting control. At SEK 258.7, the A-share is ~1.1% premium to B (SEK 255.9). The fundamental upside is identical. The margin ramp toward the >15% EBITA target is the key catalyst, offset by pulp/energy/FX swing risk. HOLD.

Valuation · reverse-DCF & scenarios

Identical to ESSITY-B: reverse-DCF base near SEK 256-265 (PEBV ~1.2, EV/IC ~1.9x, ~5.5% FCF yield). Base SEK 275 (margin ramp toward >15% target + A-share voting premium vs B-share peers); bull SEK 325 (pulp/FX favourable + >15% margin achieved); bear SEK 205 (pulp/energy cost spike or demand softness).

Market-implied growth
+2.1%
NOPAT CAGR over 5y the EV already requires
No-growth value / share
SEK 245
95% of price; rest = priced-in growth
ROIC − WACC
+4.9 pp
ROIC 12.9% vs WACC 8.0% — positive = value creation
CAP (priced-in)
30.0 yrs
years of excess returns the price implies (fades to WACC)

The market pays today’s enterprise value for roughly 2.1% 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 (95% of price), so the rest is priced-in growth.

Scenario24m targetImpl. gUpsideProb.Driver
BullSEK 325+11%+26%30%Pulp/FX favourable; >15% margin target achieved; A-share premium stable
BaseSEK 275+5%+6%45%Margin ramp continues; A-share at small voting premium to B
BearSEK 205-7%-21%25%Pulp/energy cost spike or demand softness; A premium compresses
Prob-weightedSEK 272+5%100%Scenario-weighted expected value

Sensitivity — fair value / share at WACC × growth

WACC \ g0%3%5%8%10%15%
6.50%346380405444472548
7.25%288313332360381435
8.00% (base)245265278300314353
8.75%213228238254264292
9.50%188199206218225244

Green = fair value above the current price of SEK 258.70. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.

Method & data. NOPAT SEK 13,652, invested capital and ROIC 12.9% are observed (adjustments.json); WACC 8.0% and terminal g 2.5% are assumptions. EV→equity uses net debt SEK 26,989. The model holds ROIC constant (no fade) over the explicit horizon; the CAP figure instead fades excess returns to WACC.

⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.

Key drivers

1. Wide moat + margin ramp

~90% branded positions; 14.1% EBITA margin (best in 5yr), target >15%.

2. Above-WACC returns

Adj ROIC ~13% vs 8% WACC, EP +SEK 5.2bn.

3. Shareholder returns

Dividend +52% since 2018, ~SEK 3bn buyback, ND/EBITDA ~1.0x.

4. A-share voting premium

Institutional ownership of A-share for governance; small structural premium vs B.

Key risks
Conclusion

ESSITY-A.ST is the voting-share version of Essity — same wide-moat hygiene business with EP +SEK 5.2bn, trading at a small premium to B. HOLD; base SEK 275.

Own for the capital return + margin ramp; accumulate on pullbacks.

Footnote evidence & sources

Every adjustment traces to the cited note/page in the source filing — click to open it there. Source reports archived locally.

Adjustment / figureValueSourceWhy mttssn treats it this way
Revenue (net sales)138,494B1, B2 / Consolidated income statementFY2025 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)19,572Consolidated income statementOperating 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 / EBIT18,531Consolidated income statementFY2025 operating profit (EBIT), continuing operations, after PPA amortization of acquisition-related intangibles. EBIT excl. IAC = 18,600. LTM EBIT 18,245.
Goodwill36,861Note D1 (BS)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 intangibles13,194Note D1 - Intangible assetsTrademarks 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)-972Note B3 / Consolidated income statementFY2025 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-69Note B2 - TB2:1FY2025 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)415Note E8 / EQ (BS equity)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 liabilities3,958Note G1 (and E4)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)38,353Consolidated balance sheet (Q1 2026)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 equivalents10,741Consolidated balance sheet (Q1 2026)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 equity88,161Consolidated balance sheet (Q1 2026)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-4,443Note B5 / Consolidated income statementFY2025 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.
Analysis history

How the mttssn view has evolved — each prior dated note is preserved.

Quality · Buffett tenets11 / 15
Understandable business
Global hygiene & health — TENA (incontinence), Tork (professional), Libresse/Bodyform; simple, legible consumer-staples model. A-share has voting rights.
Durable moat
Wide: leading positions in ~90% of branded sales, global scale, distribution density and brand strength in essential, recurring categories.
Able & honest management
Disciplined and shareholder-friendly: dividend SEK 8.75 (+52% since 2018), recurring ~SEK 3bn buyback, net-debt/EBITDA ~1.0x. A-share voting premium.
Financial strength
Adjusted ROIC ~13% > 8% WACC, EP +SEK 5.2bn, best-in-5-years 14.1% EBITA margin — genuine value creation; pulp/energy/FX swing the result.
Margin of safety
Limited: A-share at SEK 258.7 vs B at SEK 255.9 — small voting premium; EV/IC ~1.9x PEBV ~1.2 prices the wide moat and margin ramp.