Good morning, everyone, and welcome to Essity's third quarter results webcast. With us here today, we have our CEO, Ulrika Kolsrud, and our CFO, Fredrik Rystedt.

Ulrika and Fredrik will take us through the events and the financials of the quarter. After that, we will move into Q&A.

To ask a question, please press *1, and please try to keep it to one question per call. With that, let's get started.

I'll hand over to our CEO, Ulrika, please.

Thank you, Sandra, and good morning and also from my side, welcome to this webcast. The third quarter was characterized by resilience and a stable performance in a quite challenging markets.

We continued with the volume-led growth momentum in our higher margin categories and segments, such as Incontinence Care healthcare, Incontinence Care retail, Feminine Care, Wound Care, and also our premium products in Professional Hygiene. On the other hand, we had declining sales and volumes in the areas where we see a contracting market, and that led to stable volumes overall for the group.

As expected, we experienced higher costs in the quarter following the situation in Middle East. To compensate for that, we implemented price increases, and prices were higher sequentially, Q3 versus Q2, across all our four business areas.

During the quarter, we also continued with our efforts to shift our portfolio towards our higher margin and higher yielding categories and segments. We progressed our strategic review of Consumer Tissue according to plan, and we also announced yet another acquisition in Feminine Care.

I will come back to that acquisition in a few minutes, but before doing so, let's zoom in on Health & Medical. In Health & Medical, we continued to grow both the Incontinence Care part of our business and the medical part of our business, driven by higher prices and stable volumes.

I would say the highlight from a category perspective was the continued good growth in Wound Care, and the highlight from a geographical perspective was the continued good growth in North America. Then when we talk products, I would say the highlight is always the new innovation that we bring to market.

In this quarter, we enhanced our JOBST offering to lymphedema patients. We extended the JOBST Elvarex Soft ready-to-wear assortment with new styles, new sizes, and new body part options.

For those of you now who know our assortment very well and who know how to treat lymphedema, you might think, isn't custom-made the better option? Yes, many patients that have lymphedema, for them, custom-made compression garments is part of the treatment.

However, it can take some time before you get an appointment with the lymphedeterapist and until you then get assessed and measured and get your custom-made compression garments. That is where the ready-to-wear assortment plays an important role.

That provides the patients with compression therapy in an early stage of their treatment journey. For us, that means that we attract consumers to the JOBST brand at an early stage.

We do this now by leveraging a strong technology platform that we already have, JOBST Elvarex Soft. Also in Feminine Care, we make use of a strong technology platform that we already have by rolling out the smart protect technology to our night segment in Latin America.

I talked about the smart protect technology in another webcast, I will not repeat myself on that, but what I want to highlight is with this rollout, we strengthen our superiority further in the strategically very important and fast-growing night segment in Latin America. We're already a strong market leader here with over 60% market share.

Talking market shares, the investments that we do to drive market shares across our Personal Care categories are paying off. We saw increasing market shares across the three categories for our branded business in Personal Care.

For Incontinence Care and for Feminine Care, that also translated into higher growth, volume and sales growth. For Baby Care, however, where we had then declining volumes and sales in our retailer brand part of the business, that did not play out in higher volumes and sales, but lower on a total scale.

Then if we look at the geographical perspective, what stood out in the quarter was the performance we have in Latin America and North America for Personal Care as a total. There is a lot of activity, a high activity level in those two geographies, which reflects their strategic importance.

If we start by turning our eyes to Latin America, this is where we announced a Feminine Care acquisition, more precisely the acquisition of the brands o.b., Sempre Livre, and Carefree in Brazil. This is supporting our strategy to grow and expand our higher margin categories in attractive geographies.

As you know from before, Feminine Care is really a category that we want to expand geographically. It's a category where we have higher margins and also where we have a proven success recipe and a very strong track record.

That is true not the least in Latin America, where we already have a leading position, for example, in Mexico and Colombia. Then Brazil is certainly an attractive market.

It's actually the fourth largest Feminine Care market in the world and growing at 4% roughly. It's also a market that we know very well.

We have a good presence there already with Professional Hygiene, with medical solutions, and also with Incontinence Care. In fact, we are market leaders in Incontinence Care with our TENA brand.

We are market leaders thanks to a very strong position in the pharmacy channel. Now, when we get access to the retail channel, which this acquisition provides, we expect to be able to accelerate our growth in TENA even further.

This is very exciting acquisition, and we expect the transaction to be closed by Q2 '27, and really look forward now to integrate this business and take it to the next level. Then if we move to North America, there, of course, since we closed that business in the beginning of this year, we are one step ahead when it comes to the integration.

We continued the integration of the Feminine Care acquisition in North America during this quarter, and we are improving our margins step-by-step. As you might recall, one of the benefits with this acquisition that we talked about was that in the US, this means that we will double our sales in Personal Care.

That gives us the scale to look at a more effective go-to-market model. In the third quarter now, we have implemented the new sales model, which is moving us towards more direct sales model and also then we taking more ownership of our commercial execution.

We've done this transition without any business disruptions, and it puts us in a better position, stronger position to build a deeper relationship with the retailers and to build our distribution and in-store visibility. I would say that TENA certainly deserves more shelf space, and the evidence of that is the strong performance and higher market shares that we have online, which tells you something about the consumer pull that is out there in the market for TENA.

I cannot help myself but to take this opportunity to show you some advertising that we do for TENA in the US. That is advertising that demonstrates our product benefits, but also helps to create that consumer pull that I talked about.

The first ad that you see here promotes our TENA Sensitive Care pads that have a 5-in-1 skin comfort formula. We have seen in consumer research that we've done locally that skin irritation is a real issue for users of bladder protection.

For us with TENA, we see that the combination of having the trusted protection that we have with TENA and caring for sensitive skin is a very good way of differentiating the TENA brand and a very relevant way of doing so. That is exactly what you see in this advertising.

Then looking at men that suffer from incontinence, here we offer superior products that are disposable, but we also offer attractive washable products. Whatever the user prefer, we make sure that there are no more dribble dramas.

Now moving to Consumer Tissue, here we had declining volumes and sales in the quarter. We see that in Europe the market is contracting somewhat, and also on top of that, we had some deliberate volume reductions coming from a restructuring that we did in Latin America.

We were exiting two smaller production sites and moving production into a more efficient footprint and also by that also stepping out of some low-value volumes. Besides that, the strong focus in Consumer Tissue is, of course, this quarter, as previous quarter and as following quarter, price adjustments.

We experienced higher costs in the quarter, and we implemented price increases. Looking at pricing in this quarter then compared to same quarter last year, there is still a lower price effect, but that is coming from price adjustments done in previous quarters.

As I said initially, sequentially, we are increasing price in Consumer Tissue, and we'll continue to work on those price adjustments. While we do so, it's of course important to continue to invest in innovation and our long-term competitiveness, and we did this also this quarter.

What you see on the picture there is that we took the Regio assortment to the next level of softness, but we also extended our moist toilet paper assortment. I actually brought this product that we put on the market in the quarter.

Here, what we have learned from research is that consumers when they use moist toilet paper, they use two or three sheets, and with this product, you need just one sheet. One is enough.

It is the largest and thickest moist toilet paper sheet that is available on the market, and it dissolves faster. Now, moist toilet paper is still a small part of the Consumer Tissue category, but it's important because it offers the potential to bring value-added growth and differentiation into the Consumer Tissue category.

Turning to Professional Hygiene, let's start to talk about a good growth opportunity in this business, and that is the Tork Vision Cleaning. If you remember, I talked about Tork Vision Cleaning in the context of AI last quarter because in this product, we are using AI in order to help our customers to optimize their cleaning operations.

In fact, we can reduce the time for their cleaning operations by up to 25% with Tork Vision Cleaning. We are continuously expanding this offer and the presence of this offer.

We are now in 38 airports around the world and adding on more and more. We're also increasing the presence in other channels like healthcare, in stadiums, and also in the industrial sector.

Quite recently, we acquired a customer, a BMW factory, a big one in the US. Here we have 3,500 devices, connected devices, in their manufacturing sites, it's big.

All of this, very encouraging data, but I think the most important thing is that 50% of our Tork Vision Cleaning customers are new to Tork, it's an excellent vehicle to attract new customers to the brand. The growth of Tork Vision Cleaning was obviously then a highlight of the quarter.

Another highlight in the quarter is that we continue to grow the strategic segments in Professional Hygiene. On the other hand, we had lower sales in the more commoditized base assortment that is more exposed to changes in the market environment.

Overall then, that led to a volume drop for Professional Hygiene as a total. A volume drop that we anticipate to be temporary as we continue to adapt our assortment to changing market environment, continue to expand our channel presence, and acquire new customers.

With that, I hand over to our CFO, Fredrik.

Thank you, Ulrika, and I will not actually demonstrate any products, at least not this time. I will demonstrate a few numbers that relates to what Ulrika was talking about.

If you if I start with net sales, you can see that our net sales increase with about 1.5 billion or 4.1% in in comparison to Q3 of 2025. Out of that, currency was 2.5%, and the acquisition, the feminine acquisition we've made in in North America is is close to 2%.

As you can see, the organic sales growth is slightly negative at -0.3%. Turning to to volume, overall, volumes were stable for the group, but we had a bit more challenging environment in in the third quarter.

That was especially the case for for Consumer Tissue and and to a degree baby and and parts of Professional Hygiene. If I start with Health & Medical, volumes were generally stable, but it was an unusually you could say quiet quarter for for Health & Medical.

We saw good growth in Incontinence and and also Wound Care, and that continues out of from from many quarters, and a bit slower in in Compression and Orthopedics. As I think Ulrika alluded to a bit, this is something we see as as hopefully more temporary.

If I then turn to to Personal Care, this was another quarter of good growth, and especially so for Incontinence and for for feminine products. In feminine products, not least for leakproof apparel, it continues to be quite strong.

Whilst in baby, it is a challenging environment, both from a competitive standpoint, but of course that is driven by continued low birth rates. We continue to work with our Nordic assortment, good market share growth there, and but overall, of course, from volume perspective, quite quite challenging for baby.

Looking at Consumer Tissue then, we had and we have talked about that a tough quarter, but we were quite impacted by the fact factory footprint optimization that we did in Latin America. Out of the volume decline of about 1.9%, 1.2% related to that Latin American restructuring.

Underlying, of course, it looks slightly better than we what you would see in in the numbers. Professional Hygiene, finally, from a volume perspective, negative by 0.6%, and this is all base products.

Strategic products, as as we talked about, that is actually continuing to improve. Pretty similar to what we think or what we saw in Health & Medical, we believe this is also, as Ulrika alluded to, a bit of phasing, and in the case of Professional Hygiene, also relating to destocking, particularly on the North American market on the back of consolidation in the distribution part of of the market.

We anticipate better volumes as we as we go go forward. Just some really short words on on price/mix.

You can see that the net impact there is -0.2%, and this is half a percent negative on price and positive 0.3% in terms mix. That's that's good.

Mix is positive, and price, as before, that comes from price concessions that we done did previously in Q4 of 2025 and Q1 of 2026. Sequentially, we have an increase of prices for all business areas, and we will continue to see that also going forward.

Turning to margins, we contracted our margins with about 150 basis points for the group as a as a whole, and this is all driven by by higher COGS. The the I'll I'll come back to that impact, but it's very very significant.

In the previous quarter, in Q2, you will probably remember that we talked about the acquisition of the feminine business and the impact of that, and we experienced some some cost issues and inflexibility when it comes to the TSA agreements relating to that acquisition in Q2. We had quite substantial impact on our margin.

We have taken a lot of actions related to that, we are now back on track when it comes to the business case. We're quite pleased with the development in in in that acquisition.

It still has a negative impact, but it's quite marginal in comparison to to what we saw in in Q2. Now looking at the gross profit margin, you can see it's down by 170 basis points, and actually, in fact, I mentioned COGS before, the impact from COGS is 190 basis points, and this is pretty much in every area.

We see raw material up, and we also see basically energy having a quite negative impact despite the fact that we have very significant savings, 180 million, very much in line with our full year estimate. We're happy about the performance in in terms of productivity gains, but clearly COGS is is not developing where where it should be.

Now if you look at the rest of gross profit, we have some impact positive impact actually from volume, and as I alluded to before, a negative impact from from price. All in all, of course, a big impact from COGS, as I mentioned.

When it comes to A&P, basically pretty much on the same level as as last year in percentage of of sales. When it comes to SG&A, you can see we have a fairly good contribution there to our margin of 20 basis points, and this is, in fact, pretty much all of it coming from the cost-saving program that we are very much in in the execution phase of and actually nearly completing that execution phase.

This is quite a good performance generally from SG&A and that cost-savings program. This is pretty much the description of Q3, but let me give you a little bit of insight into Q4 and what we expect when it comes to various cost items.

I'll start with COGS, and you have seen now that we've had some very significant cost increases. We expect a significantly higher significantly higher COGS also in Q4, and this is related to Q4 of 2025.

We also see significantly higher cost sequentially, and of course this comes from also again raw material and and also energy. This is the COGS part.

When it comes to SG&A, we expect SG&A excluding A&P to be roughly on the same level or actually even slightly lower than what what you what you've seen in Q4 of 2025, and actually also sequentially. This is again a result of the cost-saving program.

You see that the savings is roughly about 150 or slightly more than 150 million for this quarter, and we expect the savings in in Q4 to be even bigger than what you see in in this quarter. If you look at, of course, the program as a whole, we expect that to actually deliver in line or more than what we have promised.

We'll come back to that at a later stage. That is basically the forecast when it comes to SG&A excluding A&P.

When it comes to A&P finally, we expect that to be slightly higher than what you have seen this this quarter. You might have seen from our report that the items affecting comparability is slightly higher than usual, or a lot higher than usual, in this quarter, close to 1.1 billion.

If you look at the full year, it's a bit above 1.8 billion. I thought I'd just have give you a couple of insights into that big number.

The restructuring cost, or SG&A savings program, is about 450 million. If you look at the combined impact so far this year of that, it's slightly above 1 billion.

You can conclude from that that we have taken most of the costs now relating to that restructuring program or the cost-saving program. Ulrika mentioned the factory footprint optimization, manufacturing footprint optimization in in Latin America, and we have taken cost of approximately about 500 million for that in the third quarter.

Roughly about half or slightly below half of that relates to cash, and the annual saving that will materialize, or has already actually started to materialize, and and coming in in in the coming year, is roughly about 150, 160 million SEK or or $17 million. The cash impact $23 million, and the annual saving roughly about $17 million US dollars.

The rest is is basically other, mainly relating to the acquisition of the Brazilian entity, a part, some some smaller amount, to the feminine acquisition, and of course also the Consumer Tissue strategic review. Turning then to our cash flow, you can see we had a really good cash flow quarter, 5.8 billion in total, and this is of course the result of continued strong cash surplus, but it's also working capital having performed a lot better.

You will remember perhaps that we have set an ambition to improve our our working capital level as percentage of net sales, and we actually did that if you compare to previous quarters. Some of you may have actually looked in in the report, and you've seen that the percentage of sales increased compared to last year has increased a lot.

It has, actually. Working capital is a higher percentage of net sales, but this has to do with our energy hedging.

Some of you are aware of the fact that we hedge energy cost, and as energy increases in in price, then our derivatives becomes worth more, and this is what you see in the working capital line. If you actually adjust for that, the working capital is is roughly about the same.

Turning then to our balance sheet, you can see here that our net debt is 25 billion, and net debt to EBITDA is is 1.0, it's a very strong balance sheet. This is, of course, despite the fact that we have acquired the feminine business in in North America, and it's also despite a quite significant share buyback and an increased dividend.

Of course the main reason, needless to say, is our strong cash flow, but you something we talked about already in Q2, we have something we refer to as IFRS revaluation that has actually impacted net debt quite significantly this year. The impact, if you just take the full year, is roughly about 5.4 billion.

Then the question might be, what is it? It's basically the surplus value in all our pension obligations.

Over the past years or year, I should say, interest rates have gone up, which takes down the the debt, and the asset management that we have had has performed quite well. In average, the asset surplus has grown quite a lot, and it's now approximately, in total, 7.6 billion.

We still have a very strong balance sheet, but if you were to adjust for this, our our net debt to EBITDA ratio would be roughly about 1.3%. With that, I leave over to you.

Thank you, you did the clicking, that was good.

I'm sorry, yeah.

Now we do it twice!

Okay.

I would just like to summarize the quarter with the fact that we delivered stable volumes, resilient profitability, and a strong cash flow. Looking at priorities moving forward then, to compensate the cost increases with price increases remains, of course, a top priority.

Our ambition clearly is to do that while also protecting and growing market shares. Then, of course, with the cost pressure that we are experiencing, it's more important than ever to control and restrain costs and spending.

As you heard from Fredrik, our cost-saving program is delivering very well, and we will make sure to get that to the finishing line, and also continue to deliver on our COGS savings. Then another top priority is, of course, the portfolio initiatives that we have: the integration of our Feminine Care acquisitions and the strategic review of Consumer Tissue.

Beyond those priorities, we will take further actions to accelerate progress and returns. Thank you for listening.

Thank you, Ulrika. Thank you, Fredrik.

We will now turn to Q&A. A chance for you to interact directly with us.

To ask a question, press *1. We already have a good list of people calling in.

The first name I find here on my list is Aron Adamski from Goldman Sachs. Good morning, Aron.

Good morning, Sandra, Ulrika, Fredrik. Thank you for taking my questions.

I have the first one on EBITDA. It has been more resilient than consensus has anticipated, I wondered if you view the 13% margin as sustainable given the expected sequential step-up in COGS that you commented about?

Also should we expect any material Latin America or any other adjustments going forward? Then my second question is on pricing.

I was wondering if you could give us a sense around the magnitude of the price increases being implemented, and your expectations for the volume elasticities, and specifically in Consumer Tissue, I was wondering if the production overcapacity and low-cost imports that we're hearing about in Europe, if that affects in any way your pricing discussions? Thank you.

Thank you, Aron.

That was many questions.

Yes,

but when it comes to the margin, we don't guide on a margin perspective as such, but I'm sure Fredrik can talk a bit about what we expect when it comes to COGS. Then when it comes to pricing, of course, what you see in the numbers is that we compensate parts of the cost increases, but what happens also is that once we compensate with pricing, then it's a moving target because then there are new cost increases and we go back on and adjust our prices again.

We have, as in Consumer Tissue, it takes roughly two quarters to compensate, but then again there are new cost increases that we have to compensate. We will continue with those efforts, announcing and negotiating new price increases.

The Latin American part, I'm not sure I caught the question there, but I think it was about if we can expect more restructuring costs from that. Now we have concluded on that initiative, so that is more or less finalized, right, Fredrik?

Yes.

Did you want to comment on the COGS?

Not more than what I have said. It's quite observable that we've seen a significant increase in not least oil-based material, but it's also packaging and distribution and pretty much all material.

The origin of this is of course the Middle East crisis and then we see additional impact from energy cost. As I said earlier that we do expect significantly higher COGS both year-on-year and sequentially.

I don't think I can add much more than that. We will compensate part of it through good cost savings, we're doing well there, I think.

We're quite happy about that, but overall, the impact will be very significant.

Thank you very much.

Thank you, Aron. We will then move to the next question, which comes from Andrei Condrea from UBS.

Good morning, Andrei.

Good morning, and thank you for taking my questions. Two from me, please.

The first one, could you help us unpack, as usual, the COGS increase into raw materials, distribution, and its other components? Secondly, just a point of clarification on Consumer Tissue, 120 basis points of the volume decline also was linked to the LatAm restructuring because you exited low-cost products.

Should we expect this to persist over the coming quarters or do you expect an acceleration in other parts of your portfolio? Thank you.

I can start there. I'm not sure if this is really helpful, but I'll be happy to give you.

If you take COGS in general, it increased by about 660 million if that's your question. Energy was 245 of that, give and take.

Then you have a bit over, well, close to 420 in pure raw material. Then distribution, I think your question was, is 75.

That's kind of the total. Then we got, as I alluded to in my presentation, about 180 or so in savings, and the rest is other.

If that was your question, those are the different components. Yes.

Yes, exactly.

Manufacturing roadmap? The optimization of manufacturing, will that impact on volumes continue to have an impact throughout the year?

It will because we executed on that factory footprint optimization. What we did was we actually shut down a couple of plants, as Ulrika alluded to, and at the same time, we actually then stopped selling some volumes that was less profitable.

The volume impact in the quarter versus the same quarter of 2025 was 1.2% volume. That is actually going to be there.

You will see exactly the same impact pretty much in Q4, Q1, and Q2 of 2027. We'll still have that impact.

Thanks very much, Fredrik.

Again, just to be clear that from a profitability standpoint, it's quite profitable, we'll see an uptick from that.

Thank you, Andrei. Let's then move to Niklas Ekman from Carnegie.

Before that, can I just remind you to just have one question per call, please? In that way, we can give you better answers and then you can return with a new call if you want to clarify anything.

Let's move to Niklas at DNB Carnegie. Good morning, Niklas.

Good morning, thank you. I want to come back to the COGS guidance here because after Q2, you warned of much higher cost, and I think we were all surprised at the magnitude we saw here in Q3, that it was a lot smaller than anticipated.

Is there any way that you can kind of elaborate a bit on the future cost increases? Are you expecting a significant further increase?

Were you surprised that there wasn't a bigger magnitude in this quarter to start with?

I don't know what you think, Niklas, but I think 658 million in COGS is 190 basis points in COGS impact, and that's including our savings, to me, that's very significant. I don't think we've had a lot of quarters with that kind of increase.

The increase was basically also if you look at this was year-on-year, 658, as I mentioned, right? If you look at sequential COGS, it was 510 million just in one quarter.

To me, that's very significant. I'm not sure exactly, Niklas, what you expected, but to me, that was a very significant.

Now you're asking what's the number for Q4, and I can't tell you that, but of course if I say it's significant also from a sequential perspective, then you would expect a fairly high number, and year-on-year, then, of course, much higher than what you see this quarter.

Fair enough. Thanks a lot for taking my question.

No problem.

Thank you, Niklas, for that question. Let's then move to Karel Zoete from Kepler.

Good morning, Karel.

Yes, good morning. Thanks for taking the question.

I have a question on your momentum in the North American market, and then in particular for the consumer business, but also your H&M business. What are you seeing in this market?

When we look at that, if we start with the Personal Care business, first we have the Feminine Care acquisition that is progressing according to plan when it comes to our sales development. We talked already now in the presentation about the improvement when it comes to margin, but I think it's good to emphasize also that sales is progressing as we expected.

Then we also have the leakproof apparel in North America that is doing very well. It's the fast-growing segment, and that is why we want to have a strong presence there.

We see that happening as well. Then we have our TENA business, our incontinence business, where we are a challenger in the market, there is a big potential for us to win market shares and grow.

We have a very strong plan in place in order to do so, and that plan is yielding results. Not the least as I mentioned, we are growing our presence in online.

Now when we are changing our go-to-market model, we believe that will help us also to accelerate in brick and mortar going forward. Then when it comes to Health & Medical, there you might remember that we did an acquisition in Wound Care, Hydrofera, some years ago.

The strategic rationale for that was to support our overall growth in Wound Care, and that is exactly what we see in North America. Also generally speaking there in Health & Medical, we have a good momentum on the back of having a strong portfolio and an efficient commercial execution.

Thank you.

Appreciate your question, Karel. Let's then take the next question, which comes from Oskar Lindström at Danske Bank.

Good morning, Oskar.

Yes. Health & Medical organic growth slowed.

What drove the slowdown? When could we expect growth to recover here in this key segment?

If you could expand a little bit on that, that would be very helpful.

Yes. When it comes to Inco, you might remember that we talked already last quarter about that we had a strong growth momentum in Inco healthcare, but we also had some pre-loadings.

That is actually what played out. It was a very strong growth in Q2, as you might remember.

Some of that was pre-loading. Nevertheless, in Incontinence products, we continue to grow, so that shows that the underlying performance is there.

That is on that side. Then when it comes to medical, we continue to have a very growth momentum, as I said, in the Wound Care space, whereas a bit slower in Orthopedics and Compression Therapy.

Then operationally, there are some different factors that are impacting the phasing. To Fredrik's point earlier, we expect the volume growth to come back also on the medical side.

In Q4 Q4 already,

or? That's what we anticipate.

Of course,

it's difficult to guarantee anything like that and say, but since these are phasing issues, we believe so.

Thank you. That was my question for now.

Thank you, Oskar. Then let's move back to Andrei Condrea from UBS.

You had another question. Hi again.

Yes, and thank you for that. Following on from Oskar's question, could you help us quantify, if possible, the impact you've seen from the phasing in Compression and Orthopedics, but also in Professional Hygiene, because you mentioned you're seeing there some phasing and destocking driven by the consolidation in distribution?

Thank you. No,

I don't think we can quantify that or are able to quantify that in any way.

No, it's very difficult.

Yeah.

There's so many factors that impacts volume. It's a perception that we see some destocking.

We picked that up from many. We see that in Professional Hygiene, and we believe there's a bit of phasing, but the exact magnitude is very difficult to say.

Understood. Thank you.

Thank you, Andrei. Now next question comes from Misha Omanadze from BNP Paribas.

Good morning, Misha.

Morning. Thanks for taking my question.

I have one. How have your conversations been ongoing with the activist investor?

Have there been any interesting suggestions from their side that you are considering now? Thank you.

First just to be clear on this, of course, where we have most of our conversations is with the board, and Cevian is not present in the board at this point in time. Then, of course, we meet with you guys, whether it's investors or it's future investors on an ongoing basis, especially in relation to the quarterly results.

We met with Cevian after the Q2 results, and we'll meet again after the Q3 results. That is more in discussing the quarter results.

They have, as you might have seen what they have expressed from our earlier conversations, is that they support the strategy that we have, including the various initiatives that we have.

Very clear. Thank you.

Thank you, Misha. Now we have another question from Aron Adamski from Goldman Sachs.

Hi again, Adam.

Hello again. Thanks for taking my follow-up.

I was just wondering if you could please discuss the expected impact of the recent tariff escalation between the US and Canada. I believe in the past that has impacted your Professional Hygiene business, I was wondering if you can discuss the expected impact on margins on the absolute basis from the fourth quarter going forward?

Thank you.

It's hard to tell exactly, Aron, but I think it's roughly in line with what we saw last time. Approximately about 60 basis points if you look at Professional Hygiene, give and take, and 20, 30-something, or a bit more maybe, Professional Hygiene, and 20, 30% basis points for the group as a whole.

I think it's always difficult to predict because it depends on exactly what we do as well, how much do we sell to Canada from the United States, etc., etc. Roughly thereabout.

Thank you.

Thank you, Aron. Now I can't see any more questions.

Do we have any final questions? Please press *1.

Or everything, all the questions are answered? No, we have a new question here from Antoine Prévot, Bank of America.

Good morning, Antoine.

Good morning, everyone. Just on A&P, at the CMD, you were talking about kind of increasing A&P spend more towards 5.3%, 5.7% of sales, but so far it remains a bit below that.

Anything you can maybe comment a bit on your plans regarding the spending there or kind of the weaker consumer backdrop maybe changing your thinking around your previous comment on the level of spending? Thank you.

We still have the ambition to increase A&P, and I think there are two factors to this. One is, of course, that we are redirecting our A&P to where it gets the most return on investment.

We can see a lot of good effects from the marketing investments that we have. That is especially, for example, in Personal Care that I talked about already, that the marketing investments that we have done are playing out very good, and that is part of the reason why we are gaining market shares across the three categories.

Then as we have the cost-saving program in SG&A where our intention is to free up more funds so that we can invest in A&P going forward. Now that, of course, we have to do in a responsible way, and at the point in time that we are right now, it's also weaker market, which means that you don't get the same return on investment in certain specific A&P elements.

Then we have to face it in a commercially smart way. Basically that's our thinking.

Thank you very much.

Thank you, Antoine. We have another question from Niklas Ekman, DNB Carnegie.

Hi again, Niklas.

Thanks. I just wanted to follow up also on this restructuring of the Consumer Tissue Latin America.

Was this in any way related to the potential divestment of Consumer Tissue? Is this something that you would have done anyway?

Kind of as a follow-up, if you could elaborate a little bit on the overlap between your Consumer Tissue production footprint and the rest of the group?

If we start with your first question, it's no and yes, meaning that no, it's not linked to the strategic review, and yes, we would do it anyhow. We continuously work with looking on how we can optimize our footprint to make sure that we are as competitive as possible and have the best possible cost structure.

What we now did in Latin America is relevant with whatever the conclusion is of the strategic review. Then as we have talked about before when we've talked about the strategic review, we have some shared manufacturing between Professional Hygiene and Consumer Tissue.

That is part of the assessment that we have done now on how do we disentangle that in the best possible way, and what are the implications of that?

You can't quantify how much...

To be clear, that is an assessment that we have to do in order to understand the value potential of that scenario. Then we can compare that scenario, a separation, with other scenarios, for example, keeping the Consumer Tissue business in Essity.

Very good. Thank you so much.

Can I just add one thing here, Niklas, since you're still on the line here, because it just struck me that when we talked about the COGS impact in Q4, there has been some questions on that, which I think is quite relevant because that's a big thing. I just want to remind everyone that we always compensate for COGS increases, raw material or energy.

We always do that. We've done that for the last 50 years, as long as we have checked, with price and price alone.

Of course, we see temporary impacts from COGS, and we see it in this quarter obviously, but over time, just to remind everyone, we're always compensating with price and we will do it this time as well. I just wanted to say that, Niklas, to remind you of that.

Yes, thank you.

Very clear. Thank you.

Thank you.

Thank you, Niklas. I think we are out of questions.

I'll give it a few minutes, or 1 minute maybe. Any more questions?

No. Let's wrap up, and before we close, I'll hand back to you, Ulrika, for final remarks.

Thank you. Thank you all for listening.

To go back to where we started this call, it was characterized by resilience and a stable performance in a quite challenging market, which I think says something about the competitiveness of our business. That said, we want more growth, as and our focus is now to really deliver on the priorities and actions that we have in order to accelerate progress and returns.

I want to leave you with one very positive news that we got the other day, and that is that Essity once again are awarded EcoVadis Platinum. You might know this is an independent global sustainability rating where they have assessed 175,000 companies worldwide, and we are among the top 1%.

That's certainly a great recognition of our sustainability performance.

Great. Thank you, Ulrika, and thank you, Fredrik, for the presentations and the answers, and thanks to our audience for listening.

If you have any further questions, just reach out to us in the IR team at Essity. Have a good day.

Bye for now.