ESSITY-A.ST(ESSITY-A.ST)
ESSITY-A.ST
Sandra Åberg: Good morning, and welcome to Essity's presentation of the Q4 and full year 2025 results. Here to take us through the highlights, we have our CEO, Ulrika Kolsrud; and our CFO, Fredrik Rystedt. After the presentation, we will open up for your questions. [Operator Instructions]. With that, let's get started. I'll leave over to our CEO, Ulrika. The floor is yours.
Ulrika Kolsrud: Thank you, Sandra. And also from my side, welcome to this webcast. The final quarter of 2025 confirms that we are standing strong in a continued challenging market environment. We continue to grow in our strategic segments, such as Incontinence Care, Wound Care and premium products in Professional Hygiene, and we strengthened market shares across our different branded categories. We're also strengthening our profit margins. Actually, we are strengthening our profit margins in all 3 business areas in the quarter, and we delivered a stronger result than last year's same quarter. When it comes to volumes, sequentially, we have a stronger volume, so stronger volume in Q4 versus Q3. Looking at quarter over last year's quarter, however, there was a flat volume growth. And that, together with the fact that we are then lowering prices in order to compensate for lower input costs is resulting in that we are reporting a negative organic sales growth. And that underpins the importance of the initiatives that we took last quarter to accelerate profitable growth. We are now operating in the new organizational setup with decentralized decision-making with end-to-end accountability and with even sharper focus on our most attractive categories and segments. And we are starting to implement our cost-saving program. In the quarter, we also strengthened our position for profitable growth by acquiring the Edgewell Feminine Care business in North America. And now with the brands Carefree, Stayfree and Playtex in our bag, we are more than doubling our Personal Care sales in the U.S., in line with our focus on high-yielding categories in attractive geographies. Another key highlight of the quarter is that we again got recognized for our strong sustainability performance. So we were awarded for the EcoVadis Platinum Medal, recognizing our sustainability performance, placing us among the top 1% companies worldwide that they are assessing when it comes to sustainability performance. And also, we have been placed on the CDP prestigious A list. I would say sustainability performance is important in all of our business areas, but not the least in the health care sector. Many of our customers in the health care sectors have high ambitions when it comes to sustainability. One good example of that is one of our biggest customers, NHS, in the U.K. They continue to pursue ambitious sustainability agenda even if there is financial pressure, with increasing demand for health care and funding under pressure. And speaking about funding under pressure, we talked already last quarter about that we see in some selected markets that there are some cuts in funding, and we continue to see that, for example, in Indonesia. That does not, however, prevent us from growing. Quite the contrary, we have a positive organic sales growth in Health & Medical, and we grow volumes both in incontinence Care as well as in Medical Solutions. If we double-click on the Medical business, this is the 19th consecutive quarter that we grow the Medical business, and we grow in all 3 therapy areas. A critical success factor behind this good performance in Health & Medical is, of course, our strong and unique offers that we have. And we continue to strengthen those offers. In the quarter, we upgraded one of our flagship products in the TENA assortment, the belted TENA Flex product. This product is specifically easy and ergonomic for caregivers to use on bedridden patients. And in this quarter, then we upgraded it with an even better comfy stretch belt. The elasticity is better, so it adapts easier to different body types and thereby, you can use this product for more patients. Also in the quarter, we relaunched one of our unique offers in the Advanced Wound Care assortment, the Cutimed Siltec Sorbact product. And in connection with that, we kicked off a new brand campaign for Cutimed on the theme of imagine a world where wounds would heal faster. And in this campaign, we showcase how our unique offers are helping health care to improve patient outcomes and reduce health care costs, thereby improving health economic -- or bringing health economic benefits. And it's, of course, leveraging these unique advanced solutions that is helping us and contributing to our performance in Wound Care and allowing us to gradually strengthen our positions in this category. Strengthened positions is also the theme if we go to consumer goods. In the quarter, we strengthened our branded market shares in 65% -- more than 65% of our business. And this is not only attributed to one of the categories, but it's actually contributing from all different -- all 4 categories. Looking at Incontinence Care, there, we strengthened our market shares, and also it's a fast-growing category. So as a result of that, we saw very good growth in Incontinence Care. In Feminine Care, we were impacted by a one-off, but underlying, we continue to perform very nicely also in this category, and that is demonstrated through the market share development that we see. In fact, in feminine, we grew our market shares in 80% of our business. And we had also some good records that we saw in the quarter. One very exciting of those is that we now in Mexico have 62% market share in Feminine Care. And as you know, Mexico is one of our most important markets for Feminine. Another exciting development in the quarter in Feminine was that we now are back to growth in Knix washable absorbent underwear. And that is thanks to new retail listings, higher prices, as well as product launches. Then if we move to Baby Care and Consumer Tissue, here, we saw an organic net sales decline. And this is for the same reasons that we have talked about previous quarters. So in Baby, we are impacted by the lower birth rates and also the fierce competition that we see, and consumers being more price sensitive than what we have seen before. And in Consumer Tissue, it's the weak consumer sentiment that makes the growth happening mostly in the mid- and low-tier segments, and we also lost some private label contracts due to pricing. Then it's very encouraging to see that we are growing our branded business, both in Baby as well as in Consumer Tissue. And that's a testament to the effect of our launches and our marketing activities. They are really paying off. And we continue to have a very high activity level in Consumer Goods. As you can see here on the slide, there are many different launches to talk about in the quarter. But in the interest of time, I have to choose one of them. And I choose to talk about the upgrade of our thin assortment, our thin towels in feminine care in Latin America. So having thin feminine pads is, of course, more discrete and comfortable than using thick pads when you have menstruation. But even so, many women actually choose thick pads because they don't fully trust the leakage security of the thinner ones. Now with this upgrade, we are introducing a new core technology that we call SmartPROTECT that manage even sudden gushes and thereby increased leakage security. And for that benefit, we have 2 -- actually 2 benefits of that. One is, of course, that we strengthen our superiority even further in this ultra-thin segment in the market, but also that we move consumers from the thicker pads to the thinner pads, which is a benefit because we normally have higher profitability in this segment. Now the activity level was also very high in Professional Hygiene in the quarter. Here, market growth continues to be depressed following the weak consumer sentiment, and we see that as impacting our sales. But we are responding to that by continuing to have selective price adjustments, continuing to work with joint sales plans together with our distributors, and also adapting our assortment. In this situation, it's super important to be competitive in all different price tiers. And in the quarter, we launched some what we call volume fighter specifications to make sure that we are at the right price point for the customer. We expect this to pay off in the coming quarters, but what has already paid off is really our push in the premium segments. So we continue to see strong growth in our premium segments in Professional Hygiene like Tork skincare and Tork PeakServe. We also continue to develop these products even further. So in the quarter, we launched an automated sensor-based dispenser for PeakServe in addition to the manual one that we have already. And that will broaden the relevance of this premium solution in the market. We are also broadening the relevance of our center feed dispenser solutions. The center feed dispenser solution allows you to take one sheet at a time, which is more hygienic and it also controls consumption. So it's cost efficient for our customers. Now in some segments, it's more important with design than in others. A good example of that is in restaurants that have an open kitchen. Then, of course, you are very dependent on a good-looking dispenser. And if you see on this picture, the black stylish dispenser here is what we launched in the quarter, and that is really a very strong fit into these type of environments. I would even call it decoration. It's really nice. Also, we launched a new refill paper with natural color that also has a lower price point. And that is then an excellent choice for those customers who are either very price sensitive and/or want to work with their sustainability image. Now all of these innovations that I'm talking about, they have 2 purposes. I mean, one is to expand the relevance of the product, but also, of course, to drive product superiority. And with product superiority, we mean that it's the preferred choice by customers and consumers. And looking across categories in 2025, we reached a record level when it comes to product superiority. And that, of course, makes us very well equipped to continue on that positive market share growth that we have seen in the fourth quarter of 2025. And now after all of these talk about products and innovations, I'm sure you guys want to hear a bit about the figures behind this. So over to you, Fredrik.
Fredrik Rystedt: Thank you, Ulrika, and I will put a few numbers to what you have been talking about here. And as you can see, and you've already mentioned it, we actually had, in terms of organic sales, a negative development during Q4. And this is basically driven by price decline and a slight volume decline. It's maybe worth noting or perhaps repeating what you said, Ulrika, we are taking market share. So this is very much a market issue. And if we actually look at the sequential development of volume, it's always a little bit of seasonality. But nevertheless, you can see that we actually grew our volume sequentially between Q3 and Q4 with just under 2%. So it's a good momentum despite the fact that we have a decline versus Q4 of 2024. I mean, some of you will actually remember that Q4 of '24 was very strong. So we also have a bit of difficult comparable. Now as before, the volume decline is very much driven by Baby, or same as in Q3, our Baby business, our Consumer Tissue business and also Professional Hygiene, and these all are leading to the group decline of volumes of minus 0.2%. So just really brief, Health & Medical, you've said it, Ulrika, we had a good volume development in Inco Health Care and Medical. And if you look at the Medical area, actually all therapy areas and especially Wound Care, so that story you will remember. And if you talk about price and mix, largely flat in Health & Medical. Consumer Goods, Inco really, really doing very well in terms of volume, Inco Retail. Feminine is as well. It's a little bit -- it's positive volumes, just under 1% of positive volumes. And that is actually despite a fairly weak market in Europe. So overall, you can say we are growing, but the European market is a bit challenging. Ulrika talked about a onetime issue in Feminine, and that is related to an adjustment that we have made of customer rebates in Latin America. So we've increased those, and that has actually impacted sales and the pricing components, and this is why you see a negative organic sales growth for Feminine. And this is temporary for the quarter. It will go back to normal in the next quarter. And if you actually adjust for that, we have stated that the underlying growth is good. And so what we mean by that is that growth would have been -- organic sales growth would have been low single digits, to give you a little bit of perspective. When it comes to Baby, again, we are gaining in our branded business in the Nordics, but we are continuing to lose in the rest of the retail branded business in Europe. And overall, volumes are down with approximately about 4%. That's also for the market as a whole. So it's not just us, but it is a very competitive market in Europe. And this is also why we are losing volumes. And finally, Consumer Tissue, we're struggling a bit with volume there, minus 2%. And this is all actually related to private label. We have talked about this before. So there is no news here. We have lost a few contracts on the back of pricing. And of course, we have always prioritized margin over volume. But of course, we don't want to lose volume. So we have selectively actually reduced prices in Consumer Tissue. And hopefully, that will pay off as we go forward. HoReCa, we've talked about Professional Hygiene, and this is, of course, still leading to a slight volume loss of about 0.5%. And there are signs here of at least stabilization of the HoReCa markets. So here, we're hoping for better conditions going forward, but there time will tell. And to summarize maybe for the group, minus 0.2% in terms of volume, minus 0.9% in terms of price and mix is actually flat. So that sums it up a bit. Then if I go to the margin, you can see that we've actually -- we've improved our margins, both if you compare between Q4 of '24 and Q4 of '25 and sequentially. And it's not only for the group, it's actually for all the business areas. Gross profit, as you can see, increasing by 180 basis points, and this is on the back of lower COGS as we flagged when we talked to you last or after Q3. So that actually happened. And we've maintained a very good price management in the quarter, all of that leading to that very good improvement of the gross profit margin. The COGS reduction is all about, I should say, raw material energy, but we actually -- and this is a little bit of -- we're proud of that. We managed under tough conditions to reach also our COGS savings of just above SEK 500 million. So you will know our target for the year was SEK 500 million to SEK 1 billion, and we said we were struggling to reach that range, but in the end, we actually managed to do that, and that contributed to that margin enhancement. As you can see, and we've said that, we want to fuel our growth. We want to fuel our innovations that we put on the market. So we are spending more in terms of A&P, and that's both percentage of sales-wise and as an absolute number. When it comes to SG&A here, you see that it's actually favorable. So we have reduced in terms of absolute. Also in constant currency, we have reduced our spending in terms of SG&A. And this is due to, of course, a tight cost control. That's not surprising to you. We've reduced our travel, as an example, with more than 30%. We have a bit of lower bonus accruals. And there is also a bit of onetime here that is positive. So it's not as good as you see here. There is a bit of onetime. But if you look at the overall group, there is also positive and negative onetime impacts in the result. So overall, all the onetime impacts are balancing off for the group as a whole. But all in all, we're quite proud of our SG&A performance. So let me then just talk a little bit about the SG&A program, the cost saving program that we have launched previously. And as you know, we're aiming for a run rate saving of SEK 1 billion towards the end of '26. Now we are actually aspiring to reach quite part of this saving already throughout this year, but that will be more towards the latter part. So you can expect more of the savings. So far, we have realized very, very little, and we've also put fairly little in terms of restructuring charges. We expect the cost of this program to be a bit over SEK 1 billion, so approximately SEK 1.1 billion in restructuring charges. Let me end this part with a little bit of guidance for Q1, as we normally do. We expect actually COGS to be slightly lower, partly from savings, but also a little bit from currency or positive currency impact in raw materials. So slightly lower COGS, that is what we expect. And we are expecting a slightly higher SG&A. And please remember, I'm now giving you guidance Q1 of '26 versus Q1 of '25. So we are expecting slightly higher SG&A, and this is primarily driven by higher A&P in line with our ambition to fuel growth. And customary, and you know that, we also give you a little bit of guidance for the full year, and we expect CapEx, to start with that, between SEK 8 billion to SEK 8.5 billion, a bit higher than we had in '25. And this is actually partly phasing and just ambitions to grow as we go forward. We expect other cost or the corporate cost, if you will, to be approximately SEK 1.3 billion, so very similar to this year -- or to 2025. The structural tax rate to be between 25% to 26%. And then finally, on the COGS savings, we remain with our estimated range of SEK 500 million to SEK 1 billion. So let me move on then to the cash flow side. We're quite pleased with the cash flow here in Q4. This is driven by obviously a good cash surplus. The margin was good. So this was a good operating cash surplus, but we also had good working capital management. So inventory days came down a little bit, continue to do that. And we had unchanged credit days, both in receivables and payables. So all fine in terms of working capital. And net cash flow was also quite strong. And this cash flow has driven a continued strengthening, of course, of our balance sheet. So net debt-to-EBITDA is approximately 1.0 here, as you can see at the end of the year. We've continued to repurchase shares in line with our program that we launched with SEK 3 billion. And so far, we have purchased 9.2 million shares or totally SEK 2.4 billion. So we are roughly about 80% through this year's program. So let me then finalize with a little bit of overview of 2025. In many aspects, this was a good year. We had an organic sales growth of 0.9%, and this is despite challenging market conditions. We actually had growth in all our business areas. We maintained our volumes and price management remained strong for the entire year. In terms of margin, we've already talked about that, but it was a very good year in terms of margin. In fact, if you look at that operating margin of 14.1%, it's the second highest we've ever had. It's second only to the artificially high margin during the pandemic that was caused by all the panic buying, for those of you who remember. So this is, from a historic perspective, a very attractive margin. And then turning a little bit to what does that imply? And some of you may have seen from the report that our EPS growth was, if you look at it, between 2024 and 2025 in nominal terms, roughly about 1% growth. Now of course, the Swedish krona has strengthened a lot. So if you actually look at the EPS growth in comparable currencies, you will see a growth of roughly about 8%. And this is quite consistent with the long-term growth of about 6% if we start with the birth of Essity as the first year. So continued good performance. And this is, of course, on the back of good margins, the growth we've had and of course, also a shrinking finance net as our net debt has reduced. Finally, then the Board has -- or will propose to the AGM a dividend increase of SEK 0.50 to SEK 8.75. This represents an increase of about 6%. And if you look at, once again, from the birth of Essity, you can say this is consistent with the growth that we've had, roughly about 6% or a total growth of 52%. So with those words, leaving over to you, Ulrika.
Ulrika Kolsrud: Yes. Thank you, Fredrik. And with that, we are leaving a solid 2025 behind us. We finished the year with stronger market shares with continued growth in our strategic segments and not the least with strengthened profit margins. It's been, from an external perspective, a quite turbulent year with a lot of geopolitical uncertainty and the weak economy. And that has, of course, impacted also our industry. And we see that the resilience that we have shown during this is really a sign of strength. As Fredrik has shared, we have grown organically during the year. We have strengthened our profit margins, and we have now the strongest profit margin in 5 years, and we have delivered a solid result. So we are proud over this, but we're also determined to accelerate our profitable volume growth and to speed up our progress towards our financial targets. And therefore, the initiatives that we've launched earlier than in 2025, with the reorganization with the cost saving program and with the acquisition of the Edgewell Feminine Care business in North America. And we bring those initiatives with us together with then the very strong financial position we have into 2026, where we remain fully committed to our strategy to drive profitable volume growth. And we will do that by, first and foremost, making sure that we have the customer and consumer at the center in everything we do. We will also do that by continuing on the path to strengthen our market shares and our product superiority. We will, of course, integrate the Edgewell acquisition to strengthen our Personal Care position in North America. And we will implement our cost save programs, both the COGS cost save program that Fredrik was talking about as well as then the SG&A cost save program, where we have the ambition to reinvest the majority of that into fueling profitable growth. And also, we will fully leverage our new organizational setup with end-to-end accountability with more decentralized decision-making and also with even sharper focus on our most attractive parts of our business, so that we can unleash the full power of our fantastic Essity teams, and also to make the boat go faster. Speaking about our fantastic Essity teams, you have the opportunity to meet some of them if you join us in our Capital Market Day on the 7th of May. We will host that in our Mölndal office in Sweden, which is our largest office. And you don't want to miss the opportunity of hearing more about our strategy to drive profitable growth and to be able to see some of our R&D laboratories in this facility as well as production facility in the neighborhood. So I really hope to see all of you there.
Sandra Åberg: Thank you, Ulrika, and thank you, Fredrik, for that walk through. Now we are ready to take your questions. [Operator Instructions]. Ulrika and Fredrik, are you ready to open up for questions?
Ulrika Kolsrud: Yes.
Sandra Åberg: Perfect. We have the first question from Niklas Ekman, DNB Carnegie.
Niklas Ekman: Can I start asking about kind of your priorities for '26 here? Obviously, volumes have been weak now for some time. And now you have a couple of quarters with a pretty strong margin expansion. How do you view that now in '26? Are you willing to sacrifice some of that margin in order to restore volume growth? Or are you more optimistic maybe about the market now having had some kind of cyclical headwinds, that they might turn to some tailwinds in '26? Or you're thinking there on the mix between organic volume growth and margins and what your priorities are?
Ulrika Kolsrud: Well, as we have talked about previous quarters as well as in this quarter, we are doing selective price adjustments in order to fuel volume growth. And also, we have the intention to increase our A&P investments. We have seen that the investments that we do in A&P is paying off very nicely, as you saw in the market share development. So that we will do. And then the volume growth will give us operating leverage and thereby also securing the profit margins. And since we talk about this and how to drive volume growth, I want to mention one thing that we're also very proud of in 2025 that will support volume growth in '26, and that is our innovation delivery in the year. We increased our share of sales that is generated through innovations and also the superiority record that I talked about earlier. That shows that we are strengthening our offers to consumers and customers, and that is the base for driving volume growth. And then, of course, we need to make sure we have the right price positioning and that we support those fantastic offers with A&P investments.
Niklas Ekman: Very good. But do you see any risk of margins? Or are you looking at maybe sacrificing some of these strong margins now to accelerate growth? Or do you think that you can do both?
Ulrika Kolsrud: Our ambition is to do both. I mean, in some areas, of course, when we have selected price adjustments, that will have an impact on margin short term. But in other areas, we have opportunities to go in the other direction. So that is a continuous work that we do to optimize this.
Fredrik Rystedt: Maybe to add, if I may, Niklas, as you are aware of, and we communicated last quarter that the cost saving program will generate fairly significant savings. And of course, we are aiming to use those funds to actually do what Ulrika was talking about here in terms of fueling growth, both in terms of selective price decline, but also A&P spend. So this is a way to make sure that we can do both, just to emphasize.
Sandra Åberg: Next up is Charles Eden from UBS.
Charles Eden: You mentioned the lower volumes and prices in Consumer Tissue private label. Are you able to quantify the organic sales decline for that business in Q4? And can I ask whether the continued challenges of this unit makes you reconsider whether this asset is indeed core to Essity going forward as you concluded at the most recent strategic review of this asset? And then if I can sneak a clarification question, it's the usual one for me, Fredrik, on the group EBITA bridge. Of the SEK 749 million cost of goods sold tailwind in the quarter, can you help break that down between raw mats and energy distribution? I've got the SEK 190 million benefit from COGS savings in Q4 from the press release.
Ulrika Kolsrud: If we start with the second question, maybe there with the reconsidering, I mean, we are continuously looking at our portfolio in evaluating and optimizing our portfolio. Then Fredrik, maybe you can help on the details of private label...
Fredrik Rystedt: COGS...
Ulrika Kolsrud: Yes, and the private label part.
Fredrik Rystedt: Yes. Charles, we are not giving the details specifically as to the individual components. So I'm not going to say that. But of course, we already alluded to that the majority of the decline in volumes of the 2% or just under 2% is coming from there. But it's worth noting that the performance or actually EBITA is really, really good with Consumer Tissue private label. And we always have a bit of volume volatility in Consumer Tissue private label. So I don't think you can draw the conclusion that it's a bad business. In fact, it actually is generating quite a healthy margin and good profit. It's just that for the time being, volume is actually low. Should I answer also -- you were asking for the breakdown of COGS, right? Was that your question there?
Charles Eden: Yes.
Fredrik Rystedt: So the majority was related to raw materials. So that was about 2/3, give and take. And then we had energy, how should I say, more or less the rest. And then if you look at the other COGS, which was basically volume decline or less absorption plus new lines, et cetera, that was about the same as the cost saving program, so to give you a little bit of indication. Does that answer your question, Charles?
Charles Eden: Yes, it does. Thanks, Fredrik.
Sandra Åberg: Then let's move to the next question. Warren Ackerman from Barclays.
Warren Ackerman: Warren Ackerman here at Barclays. Could you maybe sort of dive a little bit deeper on the A&P spend? You're talking about the increase to help drive the volume. I get it's going to be funded from the savings. But are you able to say -- I think it's around 5% of sales at the moment. But how much do you want to increase that by? And what is your current A&P mix in terms of online digital, and how do you measure the returns on that investment? What kind of tools do you have to sort of figure out where and how you allocate that spend? It sounds like it's going to be a big part of the story for this year. So just keen to understand a bit more on the details.
Ulrika Kolsrud: And I can answer to some extent today, but I would also then invite you to the Capital Markets Day and talk more about this in detail. But of course, we are eager to measure the return of our marketing investments. So we do that on a regular basis. And it's by doing research on what we produce as well as following up that the activation is having the effect that we expect, both when it comes to purchase intent, when it comes to awareness and, at the end of the day, that it's generating the sales and the repurchase that we are expecting. So that we do on a continuous basis to make sure that we allocate the investments to where they do the best job for our brands. That was one question. The other question was more about how much we intend to increase A&P.
Fredrik Rystedt: Yes, we haven't specified that. And of course, it's connected also to the innovation that we put on the market, because that always has an impact on the A&P spend. But generally speaking, we are, of course, convinced and, Ulrika, you gave a couple of examples here that A&P in general is fueling growth and is also profitable. You were asking there, Warren, about how we actually track profitability, return on market investments that we do. We believe we are reasonably good at it. Of course, as you always know, it's really very difficult to exactly have a scientific way of measuring. But we think we are pretty okay with measuring return of market investment. So to allocate where to put it, I think we are doing it reasonably okay. So we can't give you exact answers to your question as to how much or exactly how much the return is. It varies a lot. But generally speaking, we will increase, and we think we know where to increase.
Warren Ackerman: And maybe just to clarify quickly, Fredrik. I guess I'm going to press you a little bit from a modeling point of view, I mean another way to ask it is, of that SEK 1 billion savings, how much of that will be sort of allocated to reinvestment? Or maybe another way to ask it is that 5%, how does that benchmark against peers? I mean, from a modeling point of view, do we stick in 6%? Or I mean, because it's sort of like it's quite a big swing factor. So any kind of help would be useful.
Fredrik Rystedt: Yes. It's a great question. And of course, we got this question last quarter that is this going to impact in the end the EBIT margin or EBIT line. And we said, yes, it will, indirectly. So it's not so that we are putting the savings to our income statement or to the EBIT line immediately. We are investing it. And through that return on market investment, we believe that over time, we will both get operating leverage for growth and then, of course, margin enhancement. And it's not all about A&P, it is also about a combination of selective price increases that we partly have already done, but will do and A&P increases. So it's actually both. It's very difficult to give you specific details on exactly where, it's many different combinations. But over time, we think it will be profitable. Your final question as to how do we compare. Quite difficult to answer that. We are making a lot of benchmarking and trying to kind of adjust for the differences in structures and categories. But I think overall, there is an upside for us to do this.
Sandra Åberg: Let's continue then with a question from Johannes Grunselius from SB1 Markets.
Johannes Grunselius: I have a question on COGS again, if you can dive in a bit more there. Because Fredrik, you mentioned here, you will have slightly lower COGS year-over-year in Q1. In Q4, you obviously had a tailwind year-over-year of SEK 749 million. It's such a huge COGS base. So maybe you can provide a range or something on the year-over-year tailwind in Q1, that would be very appreciated, if you can give any indications, please.
Fredrik Rystedt: Yes, we can. So thanks, Johannes, for the question. And we have chosen to guide only on COGS as a totality, because understanding all the ins and outs doesn't make things easier to actually grasp. So we are typically reasonably accurate when it comes to the estimate of the entire COGS number, and this is why we are giving it to you. But as I said, raw material is largely -- they're a bit in and out there, or positive and negative, but it's largely going to be a bit positive as energy as well, perhaps, if we compare then Q1 versus Q1. We're going to continue to have a little bit of unfavorable volume comparisons. We're going to have a bit of new -- or cost for new lines that we will have -- we're putting in place in Q1, and then we'll have a bit of cost savings. So all in all, this will give a slightly lower cost. The main driver actually still being raw material. And if you think about the main driver of raw material, it's actually mainly favorable FX actually.
Johannes Grunselius: Okay. Okay. Can I put it the question in this way, if we look at COGS sequentially, are you thinking about more stable COGS? Or are COGS perhaps up a bit Q1 over Q4?
Fredrik Rystedt: It's mainly stable. Mainly stable, you can say.
Sandra Åberg: So let's move to the next question. Aron Adamski from Goldman Sachs.
Aron Adamski: First, I had a follow-up on growth expectations for 2026. I mean, against the backdrop of lower input cost environment that you highlighted, would you expect price to be negative for the entirety of '26? And given that context, would you expect to achieve a better organic sales growth in '26 than you have done in '25? And then second, a quick follow-up on the A&P discussion. Can you please give us a sense of how the advertising step-up is going to be phased through 2026? Is it going to be more front-loaded? And therefore, could we expect the margin delivery to be relatively weaker in the first half of the year, given everything you said on volume, price adjustments and the cost savings delivery?
Ulrika Kolsrud: I almost forgot the first question after the third question. What was the first question again? Sorry.
Aron Adamski: Sorry, just on pricing expectations for '26.
Ulrika Kolsrud: Yes, it was pricing and volume expectation, that's true. So I mean, we need to be agile and want to be agile when it comes to pricing because it's, of course, dependent on what happens in the market environment. So we are adapting to both, of course, what happens with input costs, but also what happens when it comes to demand and need to adapt to that situation as well as being fully equipped to capture the market growth when the wind is turning. So therefore, of course, there are scenario planning and so on, but to be agile is most important. When it comes to organic growth, yes, our ambition is clearly to move towards our financial target with 3% organic growth. So our ambition is to accelerate our growth. But again, we are in a volatile environment. So it's so important for us, and that's why it's so great to see that we are strengthening market shares in this quarter, because when the market is as volatile as it is, what we can focus on a lot is to win the relative game. And what we see in the quarter is that we're doing exactly that. And what's also important for us is that we win where it matters the most, and that is to drive our strategic segments. So that was an answer to say that we need to stay agile and see what happens in the market and then adapt to that.
Sandra Åberg: Perfect. Aron, does that answer your question?
Aron Adamski: Yes. Just on the second question on the phasing of margins, I suppose, for 2026, maybe if you could give us a bit more color on how the step-up in A&P is going to be phased and how is that going to impact the margin phasing through the year?
Fredrik Rystedt: Maybe I can -- we don't give those kind of detailed guidance, as you've seen, Aron, but just maybe as a little bit of still a hint or 2, maybe even. First of all, you can see that Q4, as we have just reported, was higher than Q4 of '24. So that step-up has already actually happened. And if you remember, I mentioned -- maybe you weren't participating, but I actually mentioned that we do expect higher SG&A cost in Q1 on the back of higher A&P. So this gives you a little bit of hint. So we believe that the higher A&P cost will be there immediately -- actually already is there, higher, if you see the numbers.
Sandra Åberg: Now let's move to Tom Sykes, Deutsche Bank.
Tom Sykes: Would you be able to say how the A&P to sales for you differs by category? And just what are the categories which would have the greatest elasticity to increased A&P spend, please? And maybe just in addition is, what's happening to your trade retail spend? And how big is that in the COGS costs presumably?
Ulrika Kolsrud: Well, if we look at A&P to sales, it's the categories that you find in Personal Care that has the consumer brands that has the biggest A&P spend in relation to sales, or I should say A&P investment rather in share of sales. Then if you look at a category like Wound Care, for example, you have a much lower A&P in relation to sales. There, it's much more about the sales force and equipping the sales force with the right products and support. And you find that fueling growth is through the sales force. And then we have everything in between there.
Tom Sykes: Okay. And in terms of sort of the elasticity, where do you think the best place to allocate incremental A&P is? Was it just across the board?
Ulrika Kolsrud: Yes. This is more about where we have our most attractive segments and categories. We want to invest the most where we have the highest potential for profitable growth and the strongest reason to win. So I think what you've seen here also now is that we have had good effect of investing, for example, in Feminine Care as well as in Incontinence Care. But we do want to fuel growth across our categories, but that should give you an indication.
Fredrik Rystedt: And I guess, Tom, your question on trade spend, are you referring then to promotional activity there, I guess, right?
Tom Sykes: Yes. I guess it's yes. That's spend with retailers.
Fredrik Rystedt: Yes. And that is by far Consumer Tissue traditionally. So the promotional -- the percentage of all products sold under promotion is by far highest in Consumer Tissue.
Tom Sykes: Okay. So that's just sitting in reduction of your revenues? Is it...
Fredrik Rystedt: It's a pricing issue. It's a way -- you can say the pricing activity, they're strategic, so kind of headline pricing, and then you've got tactical pricing. And so promotion is a tactical -- it's what you do on a more temporary basis. So it's not list price adjustment.
Tom Sykes: I get some of it. Sorry. Is there not spends that you would do on the websites of major retailers to get up the ladder of people searching for particular categories? I mean, that wouldn't -- or do you just include that in pricing?
Ulrika Kolsrud: No, there is also brand communication and marketing that we do through the retailers or in connection with the retailers. So that is one element. But to Fredrik's point, when it comes to price campaigns, that you see in the sales.
Tom Sykes: Okay. But just to clarify, does all your, if you like, A&P type spend, setting aside any promotion and price reductions, does all of that sit in the A&P line? Or does some of it sit also in the COGS line, because it's trade spend that goes on?
Fredrik Rystedt: Not in COGS. It's not in COGS. It's either sales or A&P. So in this case, what you're referring to is A&P. So it's not COGS. I'm not sure how that could be possible. But we can talk about that offline, but it's not in COGS. Promotion is in sales and marketing in A&P.
Sandra Åberg: Perfect. Next question comes from Karel Zoete from Kepler.
Karel Zoete: I have 2 questions, if I may. The first one is in relation to M&A. You've done last year, one acquisition, but the market is difficult certainly in places such as Latin America. What's hindering you from doing more M&A? Or why haven't we seen more acquisitions over the last 18 months given the difficult markets? And then the second question is more in relation to Asia. I think there's still an agreement within that they can use some of your brands. What's the status of this? Is this going to be renegotiated in the coming year? Or do you have plans to build operations yourself selectively to capture some of the growth in the Asian market?
Ulrika Kolsrud: If I start with the M&A question, maybe you can answer to Asia later. We continue to work actively with M&A, identifying potential targets and assessing potential targets. As you know, it's part of our strategy to grow both organically, but also inorganically. So we clearly have the ambition to do value-creating M&As. But we are, to that point, very disciplined to make sure that they are value creating. So that is, of course, always what we're doing in the screening to make sure that, that is the case, and always judging what is the most value creating, is it organic growth or inorganic growth. And you could argue, of course, when it comes to valuation, that in order to bridge the potential valuation gap, we need to find quite a lot of synergies then to secure that value creation. So the short answer is that we have the ambition to drive more M&As and are working on that actively.
Fredrik Rystedt: So Karel, when it comes to Asia, the story isn't really different there. When we divested Vinda in 2024, there was a license agreement for these brands, and that expires in 2027. Now as we sold the company, we also granted an option for the buyer to continue licensing these brands also in the future against, of course, a license fee. And that option has not yet been translated into an agreement. And of course, we remain unsure of whether that will actually happen. So there are 2 possibilities here. One is that we continue with the license agreement subject to the buyer actually exercising on that option, or if they don't, then, of course, we get those brands back in Asia. So we cannot give you an answer at this point of time as we actually don't know.
Sandra Åberg: Let's move then to Misha Omanadze, BNP Paribas.
Mikheil Omanadze: I just wanted to zoom in a bit more on your end market dynamics where you already provided some helpful color. And overall, it seems that the markets remain challenging. If you were to look at your biggest category geography exposures, where would you say you saw the biggest sequential change from the previous quarter in both positive and negative direction in terms of end market trends and consumer environment?
Ulrika Kolsrud: I wouldn't say that we've seen any big movements between quarter 4 and quarter 3. It's been quite stable when it comes to market environment.
Sandra Åberg: Next question comes from Henrik Bartnes from ABG.
Henrik Bartnes: One question for me, please. You have historically talked about seasonally lower volumes in Q1 compared to Q4. And if we look at Q1 sequentially, how should we think about volumes this year? Are there any indications that this year won't show any seasonally lower volumes?
Fredrik Rystedt: I can maybe answer. First of all, we don't give volume estimates. We can only report what has historically been the case in terms of seasonality. So as you rightly say, seasonality would suggest that volumes in Q1 are lower than Q4. It's not actually one and the same for all our business areas or categories. Some don't have that. But in general, if you look at the group as a whole, clearly, volumes are typically, I should say, lower in Q1 versus Q4, but we are not giving an estimate for '26 specifically.
Sandra Åberg: Let's now move on to Celine Pannuti from JPMorgan.
Celine Pannuti: So my question is coming back on the Consumer Goods performance with price/mix negative. I think you mentioned that you had to roll back some pricing in order to keep some of your customers. I think it was in private label. Does that mean that going forward, we still have to annualize that, and so we'll have continuous negative pricing. I also said you mentioned there was a one-off impact from Latin America. So if you could give us a bit of an idea on that go forward. [indiscernible].
Sandra Åberg: Sorry, your sound is not working really. So we can't really hear your question. Maybe we can just start with the 2 questions you had now, because then we have to move on. Is that okay?
Celine Pannuti: Perfect.
Sandra Åberg: Good.
Fredrik Rystedt: Yes. I think I got the question whether the price/mix -- the negative price/mix in consumer goods would flow into Q1 or Q2? Was that the question, Celine?
Celine Pannuti: Yes. I mean, I would presume it annualizes if you have made some pricing concessions. And then the question, is there any other price negotiation that you are going through now in retail?
Fredrik Rystedt: Yes, right. No, again, we can't comment on, obviously, price negotiations. That's more commercially related, I can't do that. But of course, as we have lower prices now in Q3 and Q4 and especially here in Q4. So there has been a price decline in Consumer Tissue. That will, of course, obviously continue into Q2. So in short, we'll see those price impacts coming or continuing in Q1 and Q2 potentially.
Celine Pannuti: And just how material is the Latin America impact that you mentioned?
Fredrik Rystedt: Yes, we are not actually giving you the exact number there, Celine, and this is for commercial reasons basically. But if you actually look at -- I gave you a little bit of guidance. It's always interesting when you say you're not going to give a number and then you almost do it anyway. But I'll do it because if you look at the minus 0.6% in terms of organic sales growth for Feminine in the quarter. And then we also stated that without that sales, organic sales growth would have been low single digit. That gives you a little bit of indication as to the size. So this is a bit -- of course, for the group, not a lot, but for Feminine, it is a bit, and it comes out as pricing. So that's temporary. That will not be there in the next quarter.
Sandra Åberg: Perfect. Thanks for your question, Celine. Now we will move to our final question, and that question is from Oskar Lindstrom, Danske Bank.
Oskar Lindström: Just a slightly different question from me. Following the Edgewell acquisition and an acquisition by another company, you're not going to be sharing, I understand, the brands Stayfree and Carefree between you. Who owns those brands? And who is paying royalties or fees to whom?
Ulrika Kolsrud: Well, we own the brands in the geographies that we are operating the brands with. So in those geographies, it's our -- we can actually then do what we think is commercially right to do with those brands.
Fredrik Rystedt: So in short, no royalties paid to anyone.
Oskar Lindström: Wonderful. That's all the questions I had.
Ulrika Kolsrud: That's what you wanted to know. Thank you for that interpretation.
Sandra Åberg: Thank you, Oskar, for that question. And now it's time to wrap up. But before we end, I would like to hand over to you, Ulrika, again, for final remarks.
Ulrika Kolsrud: Yes. Well, thank you, Sandra. Thank you for joining us today. We are leaving, as I said, a solid 2025 behind us, where I think our resilience has really been a critical success factor. And it's especially great to go into 2026 with this good market share momentum that we have talked about today. And finally, I look forward to see you all on the 7th of May in Mölndal, Sweden.
Sandra Åberg: Yes. Thank you for that, Ulrika, and thanks to you for joining. If you have any further questions, just reach out. We will be road showing in Stockholm today virtually next week, and we will also be in London next week. So see you there. And take care, and have a good rest of the day. Bye for now.