Essity AB (publ)

We're going to give you that wow effect.

This is everyday care. This is smarter care. This is sustainable care. To over a billion people. For everybody and everybody, this is Essendon.

Good morning, everyone, and welcome to this presentation of Essity's second quarter 2026 results. Our CEO, Ulrika Karlsrud, will start by presenting the business highlights for the quarter. We will then turn to the financial metrics presented by our CFO, Fredrik Rydstedt. After the presentations, we will open up the line for questions. We are looking forward to your questions and we kindly ask you to ask one question per call. Now, I'm pleased to hand over to our CEO. Ulrika, the floor is yours.

Thank you, Sandra. And also from my side, welcome to this webcast and good morning, everyone. We delivered positive organic sales growth in the quarter, primarily driven by a continued good volume development. The activities to strengthen our value propositions, to increase marketing investments and to make selective price adjustments have paid off. And we are growing in three out of our four business units, namely in health and medical, in personal care and in professional hygiene. It was a tougher quarter for consumer tissue where we had lower sales. Then if we look at our profitability, we continue to have and maintain healthy margins in the quarter, even though they were slightly negatively impacted by the geopolitical environment that is coming with an increased cost inflation. When we look at now going forward, of course, we will compensate that with price increases, and we are already driving price increases not yet visible in our P&L, while we remain focused on protecting and even growing our market shares. LOOKING AT OUR COST SAVINGS, WE DELIVERED BOTH OUR COST SAVING PROGRAM IN SG&A AS WELL AS OUR COGS SAVINGS ACCORDING TO PLAN IN THE QUARTER. WE ALSO BENEFITED FROM THE VOLUME DEVELOPMENT, THE POSITIVE VOLUME DEVELOPMENT. SO IN TWO OUT OF OUR BUSINESS UNITS WE STRENGTHENED OUR PROFIT MARGINS IN THE QUARTER. AND ONE OF THEM IS HEALTH AND MEDICAL. Besides the good margin development, we also delivered a good sales development in health and medical. We had positive volume development leading to good sales growth, both in medical solutions as well as in incontinence products. What's especially pleasing to see, I think, is that we had a very good continued volume growth and sales growth in wound care, but also that we're picking up sales in incontinence products. Talking about incontinence products, I wanted to come back to a topic that we have touched on several times before and that is the financial pressure that is facing healthcare systems around the world and the work that we do at Essity to encourage policy makers, healthcare leaders as well as procurement bodies to take a total cost of care approach. This we know from our studies in incontinence care management that that has benefits both for patients, for staff, as well as for the healthcare financials. And in this quarter, one of the world's largest healthcare systems took a step in this direction. It was NHS in the UK that introduced a value-based procurement guidance for medical technology, asking their buyers to assess the broader value, including patient outcomes, staff outcomes, supply chain resilience, environmental impact, rather than only looking at purchasing price. Of course, positive for us and beneficial for us who have holistic solutions that reduce the burden on patients, staff and the healthcare system. Now, this will not have an immediate impact on our P&L, but it is very positive for us and others who are working with holistic solutions and continuously invest in innovation. Talking about investing in innovation, we are innovating across our brands, and in this quarter in health and medical, we launched the next generation printed delta cast in the orthopedic assortment. Now, for those of you who have ever been in a cast, you know it's not the most pleasant experience, but we make it a little bit more fun with colors and patterns. And that is actually making a difference, not the least for children who are injured and their well-being, then they need to be put in a cast. And now we are using a digital printing technology. And with that, we can move beyond the standard four colors to millions of colors, and we get the customization to a very different level, to a totally new level. And this digital printing technology that provides not only flexibility, but it's also more cost efficient for us. And I think this is really a golden example of where our innovations are providing both customer benefits and cost efficiency. We delivered new products or improved products in all our business areas in the quarter. That goes also for personal care. In personal care, we, for example, improved our Tena Discrete Ultra product, a better shape, which makes sure that the product stays in place and stays in shape during use. Also, we strengthened the offer that we have in leak-proof apparel for men. So we extended the range of boxers and we sharpened the marketing claims in this assortment. And then we rolled out our SecureProtect technology on our feminine hygiene products in Europe and Middle East Africa. And if you don't remember this because we already launched it in Latin America a few quarters ago, it's about a new technology for fluid management that is addressing an unmet need in menstrual health, namely handling sudden gushes. So investing in innovation and also supporting our superior solutions and innovation with marketing, that is really paying off. And also this quarter, we strengthened our market shares in personal care. We had a really strong quarter for incontinence products, both with good volume growth and sales growth. Also a very strong quarter for feminine hygiene when it comes to volumes and sales. Then the margins in feminine was negatively affected by the acquisition in North America. And we are now taking measures to make sure that we move through the transition period as fast as possible so that we improve our profit margins as fast as possible. When it comes to baby care, we followed the same pattern roughly as previous quarters, namely that we were challenged in our retailer brand part of the business with the lower birth rates as well as with the intense competition. But then when it comes to our branded businesses in baby, we're going from strength to strength. So also in this quarter, we grew sales and market share with our Libro business. Now, before leaving personal care, worth to highlight is also that we grew across the different regions in personal care. So in Latin America, in North America and in Europe. And looking then at consumer tissue, we had positive development of our branded business in Europe. Otherwise it was, as I said, a tough quarter where we had lower volumes and also lower pricing, which is a spillover effect from 2025. NOW, OF COURSE, WE ARE IMPLEMENTING PRICE INCREASES AS I SAID ORIGINALLY. WE HAVE ALREADY IMPLEMENTED AND CONTINUE TO DO SO IN ORDER TO COMPENSATE FOR THE COGS INFLATION WHILE WE STAY FOCUSED ON CAPTURING PROFITABLE VOLUMES. And to do that, we are supported by innovations. And also in consumer tissue, we had an active launch agenda in this quarter. We upgraded our Regio Rindemas products, which is a lot of times sold piece by piece in Mexico. So roll by roll, which is an important segment in Mexico. And this quarter, then, we made this Regio product last even longer, which is exactly what the consumers are asking for in this segment. We also leveraged our skin health competence that we have in the company to upgrade our Lotus assortment both in dry toilet tissue as well as in moist toilet tissue. So now the Lotus Comfort Sensitive that is really providing gentle care for sensitive skin which is an attractive positioning to have and something that we are very well placed to exploit. Now, last but certainly not least, let's look at professional hygiene's performance, because we're talking very good performance here. This is the second business area where we strengthened our margins in the quarter. We continue to have good volume growth in professional hygiene and sales growth. Strategic products are continuing to outperform the market, and it's also here good to see that we're growing across the regions. We've had some specific focus on North America in the past quarter since there has been some market developments and so on there. And especially good to see that we continue to have a good performance also in North America. North America is, by the way, the region that is probably the most benefiting from the launch that we see in this quarter for TORQ. We are upgrading our TORQ mini jumbo toilet product, which is basically jumbo rolls in a very slim dispenser that takes little space. And this is a significant upgrade, and it's a very important product in the North American assortment. So what we're doing is that we make it easier with the dispenser designed to tear off the paper for the user at the same time as it's easier for the customer to refill and for the maintenance people to refill the dispenser and do that with low waste. So it's a better torque experience for the user and for the customer. And speaking about torque experiences, wherever there is football or soccer, whatever you want to call it this summer, there is likely to be torque. STADIUMS ACROSS PLACES LIKE MEXICO CITY, VANCOUVER, PHILADELPHIA, LOS ANGELES, NEW JERSEY, ALL USE TORC TO ELEVATE THE FAN EXPERIENCE. AND THIS IS OF COURSE BECAUSE THEY KNOW THAT TORC UNDERSTANDS HOW TO PROVIDE SUPERIOR HYGIENE SOLUTIONS IN HIGH TRAFFIC VENUES. Now, speaking about torque in high-traffic venues, that actually brings me to our progressive adoption of digital solutions and AI, because we are using AI to support our customers in high-traffic venues with superior hygiene solutions. We are equipping our Torque Vision Cleaning with AI so that we can optimize cleaning or the customers can optimize cleaning in these high traffic venues. A very good example of how we integrate AI into our solutions and improve the user experience. Another relevant example of AI for the quarter, I think, sits in innovation, because the innovation I talked about, smart protect in feminine care, that actually hit the market six months earlier than what it would have done a few years ago, thanks to the AI-powered digital engineering tools that we are using in our product development. And specifically for the quarter, we also went live with an agentic AI solution in procurement that improves data quality and efficiency in that process. So these are some examples that are relevant for the quarter specifically. But as we've talked about before, of course, we adopt AI at scale in many different areas across the company and across the value chain. Some of them are in demand and supply planning, in predictive maintenance, in marketing and claims development, and not the least in financial services. Right, Fredrik?

Yes, thank you, Ulrike. Absolutely, we do exactly that, and we use it increasingly as an example in business control applications and in shared services, as you mentioned, for instance, for payables. And this is, of course, just the beginning, so we see great potential as we go forward. So I will lead you through some of the numbers. Ulrike has talked about the development in general terms, and I'll show you a little bit about the numbers. So if we start with net sales, as you can see, our sales grew with about a billion SEK if you compare to the same quarter of last year. OUT OF THIS, 0.3% REPRESENTS ORGANIC SALES GROWTH AND 1.7% IS RELATED TO THE ACQUISITION OF THE FEMININE BUSINESS THAT WE DID IN NORTH AMERICA. AND IF I START WITH THAT ACQUISITION, YOU CAN SAY GENERALLY SPEAKING THE NET SALES IS ACCORDING TO OUR PLANS AS IS THE VOLUME. SO ROUGHLY PERFORMING AS IT SHOULD IN TERMS OF SALES. So if I go to the volume side, you can see that it grew with 1.4%, and that continued the trend that we saw also in the first quarter of this year. And we saw accelerated growth for health and medical, for personal care, and also for professional hygiene, as Ulrika mentioned earlier. And starting with health and medical, we actually saw very good growth for both of these entities or areas, so both for incontinence and for medical. And the total volume growth was about 2.5%. We can't rule out a bit of a pre-buying trend in the second quarter. That happens occasionally. But nevertheless, the momentum in health and medical was very strong. And particularly so for wound care. It continues to do super well in terms of volumes. Thank you very much. Rika talked about baby, and the market there, the market demand is still challenging, as is the competitive environment. So we grew, and volume growth was good, and market share development in the Nordic part of the business, whilst the continental retailer brand was challenging and negative growth. And overall, we had a growth or negative growth of just about 3% or thereabove in Europe. IN THE SECOND QUARTER. CONSUMER TISSUE, 2.7% OF VOLUME DECLINE, AND THIS IS A BIT, YOU CAN SAY, SKEWED BECAUSE THE VOLUME INCREASED FOR OUR BRANDED SALES AND DECLINED FOR OUR PRIVATE LABEL. IF YOU LOOK AT THE TOTAL MARKET, IT WAS JUST THE OPPOSITE. SO BRANDED WAS ACTUALLY DECREASING MUCH MORE THAN WHAT WE SAW IN PRIVATE LABEL. SO WE WERE A BIT DIFFERENT, AND OF COURSE THIS IS FAVORABLE FROM A MIXED PERSPECTIVE. But overall, the overall volumes were negative. And then finally, professional hygiene with a 3% volume growth. So really continuing to have a very, very good volume development that started in Q4 of last year, Q1, and now accelerating in Q2. So if you look at price and mix here, you can see that it's negative with 1.1%. And this is actually all price. In fact, more is price. So we had a price decline of 1.3%. And this is a consequence of the price concessions that we have done in previous quarters. So if you look at sequential development of price, it's largely flat. So this is all about the price concessions that we did primarily in consumer tissue. in baby and also in professional hygiene. In previous quarters, and this was with a bit of different background, when it comes to consumer tissue, it was very much about adapting to the lower pulp prices that came last year. When it comes to baby and professional hygiene, these were deliberate decisions to increase the volumes. So again, related to previous quarters. So with that, I'll move on to the margin. And as you can see, and we've also stated that in the report, we believe the margin, given the geopolitical uncertainty and situation, the margin is resilient. It declined with 30 basis points. BUT WE SAW A VERY GOOD DEVELOPMENT FOR HEALTH AND MEDICAL, A SOMEWHAT BETTER MARGIN ALSO FOR PROFESSIONAL HYGIENE AND A DECLINE FOR PERSONAL CARE AND CONSUMER TISSUE BUT FOR DIFFERENT REASONS. IF YOU LOOK AT PERSONAL CARE, IT'S LARGELY RELATED TO THE ACQUISITION OF of the family business in the US. And as Ulrika has already mentioned, we have seen unexpectedly a bit higher cost, actually both for cost and for services. And we are still a bit inflexible due to the setup with the service agreements that we have in place. And so we are working very extensively to integrate the company into our own business, and that's progressing according to plan, but it leaves us a bit inflexible and it will take some time to restore margins to where they should be. Now, once again, we are very committed and very strong believers that we will deliver the business plan as we have contemplated or calculated before. So overall, the gross profit margin declined by 70 basis points. As we communicated in Q1, COGS did increase, actually a bit less than we had anticipated due to favorable currency movements, but it did actually increase and that had a drain on the margin. WE HAD, AND I ALREADY MENTIONED IT, SOME PRICE DECLINES IN CONSUMER TISSUE, PROFESSIONAL HYGIENE, AND BABY, AS I MENTIONED, THAT ALSO HAD A NEGATIVE IMPACT. AND ALL OF THIS TO A DEGREE WAS COMPENSATED BY A POSITIVE MIX AND and volumes, but overall, of course, gross profit was down with 70 basis points. Now, we've communicated many times that we strive to continue to invest into growth in AMP. We did that also in this quarter, as you can see, and we had a very good development of our SG&A. So, again, we have communicated many times around our cost-saving program in SG&A that is starting to deliver now. So in the quarter we are having a benefit of about 100 million and we will gradually see higher numbers here in Q3 and especially so in Q4. And we are very much convinced that we will reach our targets of one billion or more of savings as run rate at the end of the year. So let me just end this section here by giving you a little bit of guidance to what Q3 will look like in terms of cost. So we see significantly higher costs for COGS, and this is no surprise perhaps, but related to oil-based material on the back of higher oil costs, obviously. And we also see higher energy costs. So overall COGS, we expect that to increase. We also expect a bit higher cost for SG&A, and this is including A&P. So this is the guidance for the cost Q3 versus Q3 of 2025. So let me go on to some really quick words on cash flow. It was 2.8 billion, so okay, it was a reasonable quarter in terms of cash flow and a very much stronger quarter than we had at the same period of 2025. So cash surplus remains very strong. We had a reasonable performance of working capital. Q2, we always consume working capital. That's just the nature of our business. And if you look at the report, some of you may have noted that the working capital to sales increased from 10% to 11%. This is actually not due to underlying factors. Underlying, it was relatively stable. It had to do with partly the acquisition of the feminine business. It had to do with currency movements and a bit of timing. But in relative or underlying terms, working capital was relatively stable. And you know our ambition to, over time, reduce that as we go forward. BUT OVERALL OPERATING CASH FLOW QUITE SATISFACTORY AND THIS HAS LED TO A CONTINUOUSLY STRONG BALANCE SHEET SO OUR NET DEBT EBITDA RATIO DESPITE THE ACQUISITION OF OUR FEMININE BUSINESS REMAINS STRONG AT 1.1 IN TERMS OF NET DEBT EBITDA AND THE DEBT LEVEL OR NET DEBT LEVEL IS ABOUT THE SAME LEVEL AS WE HAD IN THE FIRST QUARTER Now, we have launched and we started and initiated the sale or share repurchase program, the third, actually, on May 12th. And we have purchased during this short quarter, so to speak, 2.1 million shares to an amount of roughly 550 million SEK. And with those words, I'll leave over to you, Ulrika.

Thank you, Fredrik. So, to summarize the quarter very quickly, I would say that we delivered volume-driven sales growth and resilient earning. Now, going forward, of course, you heard Fredrik talk about the cost development. So, needless to say, one of our top priorities is to compensate with price increases. And we've already implemented some. That will that is not yet visible in our P&L and will continue to compensate for the COGS increases while maintaining our focus on also driving profitable volume growth. Another one of our top priorities is of course to continue to execute on our various initiatives. The COS-A program that Fredrik talked about as well as now maximizing the leverage of our new organization that we have in place. the integration as quickly as possible of the feminine acquisition in North America and also progressing on the strategic review of our consumer tissue business. Then if we go beyond the initiatives that we have, we talked in the Capital Markets Day of the different focus areas that we have to improve our performance even further and accelerate our progress towards our targets. And we then maintain the work and activities in these areas, specifically investing even further behind our very strong brands and our superior products and reducing costs further in order to free up funds to be able to do exactly that. Also, we are sharpening our innovation agenda. And we do all of this in order to accelerate our progress towards our financial targets, which remains to be that we should grow above 3% organically on a profit margin of at least 15%.

So with that, I guess we hand over to Cuney. Yes, thank you Ulrika and thank you Fredrik. We will now open up the line for questions. So if you have a question, press star one. And as I said in the beginning of the presentation, please keep it to one question so that everyone gets a chance to ask a question and also for Ulrika and Fredrik to give you the best possible answers. Okay, are we ready to get started? Yes. Yes, perfect. So we have the first question from Aaron Adamski from Goldman Sachs. Good morning, Aaron.

Good morning, Ulrika, Fredrik and Sandra. Thanks for taking my questions. My question, I have one. Could you talk about the performance of consumer tissue and what do you expect for rest of the year in particular? Could you give us a sense of the magnitude of price increases that you have announced so far? When do you expect this to start contributing to organic growth given that there is always an element of the lag? And also in the context of Q1 performance, how do you expect the non-branded volumes to evolve for rest of the year? Thank you.

Well, if I start briefly, as I mentioned already, we have already implemented some price increases and we have agreed on some others that will be visible in our P&L in Q3. But we continue to work with price increases. And of course, it's a quite volatile situation. We don't know exactly how the costs will develop. So this will have to be a continuous work that we do over time. AND WHEN IT COMES TO THE VOLUME DEVELOPMENT, WE HAVE I THINK WE MENTIONED THAT LAST QUARTER THAT WE HAVE SECURED SOME VOLUMES IN CONSUMER TISSUE IN THE PRIVATE LABEL BUSINESS FOR THE SECOND HALF OF THE YEAR. FREDRIK MAYBE YOU WANT TO BUILD ON THAT.

No, I think you said it very well, Aaron. We do have a lag, and this is, of course, the same this year, but we always compensate with price. So we will continue with price increases as long as it takes to fully compensate, as we always do. Thank you.

Thank you for your question, Aaron. Now we will move to the next question, and that question comes from Molly Walensky from Jefferies. Hi, Molly.

Hi. Good morning, everyone. Good morning. What is your one question today? Yes. Can I ask about professional hygiene and any one-off benefit to the Harika business from the World Cup, or do you expect that this type of volume growth, very good volume growth, I should say, can continue? Thank you.

Yes, as we talked about here also, I mean, we've seen a volume growth in professional hygiene for several quarters. So that is clearly an underlying performance improvement that we have and that we will maintain or foresee that we will maintain. So, of course, I mean, big events is positive for the TORC business because people come together, they go to restaurants and to big venues and so on. But that is no different depending on what event it is. So we don't see that that has any specific effect. Then, of course, we are very proud that TORC is seen as a solution that provides superior hygiene solutions in Europe. high-traffic venues, whatever the arrangement is.

Thanks for your question, Molly. I hope you got the answer you wanted. Perfect.

Yes, good, thank you.

Thank you, Molly. So then we will move to Johannes Grunselius, SB1 Markets. Good morning, Johannes.

Good morning, everyone. It's Johannes here. Yeah, I have a question on if you can maybe elaborate and perhaps quantify any pre-buying effects. I think you mentioned this in the discussions here earlier, but is it possible to say anything about what you think about the effects on pre-buying?

Now, what we said was that we cannot rule out that there is some pre-buying effect on the incontinence care side in health and medical, but the quantity of that we cannot say. We don't know.

Oh, okay, fair enough. Thanks.

Thanks for your question, Johannes. We will now move to Tommy Arnesjö from Handelsbanken. Good morning, Tommy.

Yes, good morning, and thank you for taking my question. So you said that you expect significantly higher COGS ahead due to oil-based materials and energy. Which divisions outside of consumer tissue are most exposed to this? and how fast can you offset increases with price increases? Do you expect to lose volumes because of it?

Well, if we start with the effect and the exposure, we're talking about oil-based raw materials like super absorbents and unwovens and so on. And there where we have that in our products is especially in incontinence care as well as in baby and some extent in feminine as well. So that we will see coming on. And the time it takes for us to move on prices, it's different. It takes one to two quarters in consumer tissue and then it can take longer where we have the longest time lag for price increases is normally in our healthcare environment, which is regulated and where we have longer term contracts. Thank you.

Thanks for your question, Tommy. We will now move to the next caller, who is Oskar Lindström from Danske Bank. Hi, Oskar.

Hi, Sandra, and hello, Ulrika and Fredrik. I'm just curious if you have any more update on the strategic review that you could provide us with, whether it be sort of which options you are currently focusing on or the timing, you know, when can we expect some kind of comment from you about the outcome of the strategic review? Yes.

THE INFORMATION IS PRETTY MUCH THE SAME AS YOU HEARD US TALK ABOUT IN THE CAPITAL MARKET SAY WHEN WE ANNOUNCED THIS AND THAT IS THAT WE EXPECT THIS TO TAKE SOME 6 TO 12 MONTHS CONSIDERING THE CONSIDERING THE COMPLEXITY AND THAT WE WANT TO MAKE THIS THOROUGH AND ASSESSING THE DIFFERENT OPTIONS THAT WE HAVE ON THE TABLE SO THAT IS STILL THE CASE ALL RIGHT SO NO UPDATE THERE THANK YOU THANK YOU FOR JOINING OSCAR NOW WE WILL MOVE TO DIANA GORBES FROM BLOOMBERG GOOD MORNING DIANA

Good morning, thank you for having me. Most of my questions were asked actually, but if we could go back to the price increases that we should see coming through in the first quarter, could you perhaps give us a little bit more detail in which regions the prices that were announced or implemented since the last quarter would be, because I believe in the first quarter you mentioned Latin America and Europe. Thank you very much.

Yeah, and that's pretty much the same. So Latin America, as we talked about already in Q1, and then also some in Europe.

So just adding up to that. Yes. Thank you. Thank you for participating. Next question comes from Niklas Ekman from DNB Carnegie. Good morning, Niklas. What is your one question today? Good morning.

Good morning. Thanks. I'd like to ask a little bit on input cost and pulp in particular. If the way I see it, I see pulp prices have been rising for nine, ten months here in Europe, and yet we don't see any significant signs of this, and you even have lower prices in consumer tissue. And when you talk about the outlook, you're highlighting oil and energy, but you're not talking about pulp. So I'm just curious if this impact is a lot smaller than we seem to think, if there's a an element of inventory revaluation or if the effects are just more lagging?

Well, I'm sure Fredrik can provide more information on this, but I just want to comment first on that, what you see in pricing in this quarter on consumer tissue is a spillover from earlier when we had lower input costs over a period of time and have adjusted to that. So just to comment on that before then going into the COGS.

Yeah, Niklas, I... Thank you very much. . . . . IS DRIVING PART OF THE REDUCTION OF THE MARGIN. BUT WHEN YOU COMPARE IT TO LAST YEAR, THE Q2 OF 2025, THEN THE IMPACT IS NOT SO GOOD BECAUSE FIRST IT WENT DOWN AND THEN WENT BACK UP. SO OF COURSE WHEN YOU LOOK AT PRICING FOR CONSUMER TISSUE, WHEN WE TALK ABOUT PRICING, WE HAVE TO DEAL WITH THE SEQUENTIAL IMPACT AND WE WILL HAVE OBVIOUSLY ALSO A NEGATIVE SEQUENTIAL IMPACT ALSO IN THE THIRD QUARTER. Just to make it very simple, yes, the pulp cost is increasing quite significantly, and it does that in Q2, and it will also be there in Q3. Super, thanks.

Perfect. I hope that answers your question then. To ask a question, please press star 1. If you have any follow-up questions and would like to ask another question, please do that, and press star 1. Let's give it a couple of minutes. Yes, here we have a question from Antoine Prévost, Bank of America. Good morning, Antoine.

Good morning, Ulrika, Frederik and Sandra. So on my end, in personal care, could you quantify the impact from the unexpected higher cost you mentioned from the H-Rail acquisition? And is it fair to assume similar impact for the rest of the year? Thank you.

Well, if I start with the second question, as I said, we take measures to do the transition as fast as possible so that we can have the same level of flexibility and agility that we have in the rest of our business and thereby address cost increases that come in a different way. So we expect to improve this quickly over time, over the rest of the year.

Yeah, maybe I can, Antoine, I can comment on the impact. Actually, you can see it in the report in the latter part of the tables there. But as I mentioned earlier, most of the impact or actually all of the impact for personal care in terms of margin decline is related to that acquisition. So you get a good grip on the impact. Understood. Thank you both. Thank you, Antoine, for joining. The next question comes from Tom Sykes, Deutsche Bank. Hi, Tom.

Yeah, morning, everybody. Just had a question on SG&A, please, and just if you could clarify the remarks you gave. I think you said that SG&A would be up year on year in the second half of the year, but it obviously looks like you decreased your SG&A in Q2 and you were decreasing it sequentially. So what's happening when, given you're driving SG&A savings which are accelerating over the course of the year, why would we then be moving into a point where SG&A is up year-on-year, please?

That's a good question, Tom. It has to do with basically you can say two things. The first one is that you may remember actually, Tom, that if you go back to Q3 of last year, we were coming off a Q2 where SG&A cost actually increased a lot. So we hit the brakes very significantly in Q3. You might remember that you saw a very big decline with everything from consultants to travel to just about everything. So you can say Q3 was very low in terms of estimate last year. So the first answer to your question is actually comparable. Then we have the second one is actually we got a bit of a phasing in terms of IT costs. So we will have a little bit of higher IT costs in the third quarter. And finally, of course, needless to say, we got a natural inflation into Q3. TO THE SG&A AND THIS IS OF COURSE ON TOP OF WHAT WE STRIVE TO DO WITH AMP BECAUSE WE HAVE COMMUNICATED MANY TIMES WE WANT TO CONTINUE TO FUEL GROWTH AND THAT'S EXACTLY WHAT WE ARE GOING TO DO ALSO IN THE THIRD QUARTER SO AGAINST ALL OF THIS OF COURSE WE ESTIMATE THE SAVINGS TO COME IN FROM OUR COST SAVINGS PROGRAM BUT IF YOU SUM ALL OF THIS UP WE'LL SEE A BIT OF AN INCREASE OF SG&A AS I TOLD YOU SO MANY MOVING PARTS TOM

Yes, no, thank you for that. Thank you.

Thank you for your question, Tom. Then we will continue with a question from Linus Larsson from SEB. Good morning, Linus. What is your question today?

Good morning. Thank you very much. Now, I'll just have another go at what you're talking about with third quarter balance between price mix and COGS. So, I think I heard you saying you're expecting significant COGS increase year-on-year in the third quarter. Are you expecting significant price mix improvement as well in the third quarter?

Again, Linus, I think we were alluding to this earlier that, of course, it's super difficult for us to comment on pricing wise an individual quarter, not least for commercial reasons, as I'm sure you will anticipate. But generally speaking, we have a different speed of adaptation for our different categories. TYPICALLY IF YOU LOOK AT CONSUMER TISSUE RELATIVELY FAST IF YOU LOOK AT HEALTH AND MEDICAL AS THE OTHER EXTREME IT TAKES A BIT LONGER SO OVER TIME WE ALWAYS COMPENSATE WITH PRICE OR ANY COST INCREASE WE ALWAYS COMPENSATE WITH PRICE BUT OF COURSE IT TAKES TIME AND DEPENDING ON WHAT KIND OF COST IS INCREASING OR INPUT COST IT TAKES DIFFERENT SORT OF AMOUNTS OF QUARTERS TO COMPENSATE But we do everything to increase prices where we can do that.

Okay, I hope that answered your question. Let's then move back to Niklas Ekman, DNB Carnegie, for another question. Hi again, Niklas. Thanks.

Yes, please. I want to switch to volume growth here. Very good volume growth here, both in Q1 and even more so now in Q2. Pretty much all businesses except consumer tissue. I'm just curious. What do you see here going forward, your ability for this to continue in the quarters ahead despite the COGS compensation that you're talking about with price hikes? Basically, how do you expect to balance this return to volume growth against your need for price hikes?

Well, first, of course, it's the underlying effects that we work a lot with in strengthening our brands and strengthening our value propositions and also increasing our marketing investments. And as we've talked about here, we do the cost-saving program in order to free up more resources to invest behind our superior products. and that will continue to drive a positive volume development. We've also taken the initiatives in order to create even better conditions for accelerating volume growth with the reorganization that makes us faster and more agile and some of the other activities that we have talked about. So this we will continue with and that will of course continue to fuel volume growth. Then, as we have also talked about here, when we work with price and volume, we have to be quite surgical to make sure that we compensate for the cost increases while at the same time keep the momentum in volume developments. And that is really the competence and capability of our commercial team to do that in the right way so that we strike the right balance.

Perfect. I hope that answered your question, and thanks for your question, Niklas. We will now move back to Molly from Jefferies. Hi again, Molly. Hi.

Thanks for taking the follow-up. Can I ask about energy costs within the EBITDA bridge, both for this year or this quarter, excuse me, in terms of how much that was an impact? And let's talk about Q3. I know you're quite hedged on whether that hedged impact will be a 10 or 100. Thank you.

Yeah, if I start with the latter question, our hedge rate for Q3 is roughly about 65% for both electricity and gas, so roughly about that much. If we look at the quarter or Q2 then versus... versus Q2 last year, the impact for energy totally was roughly about 40 million, negative. So not huge, actually, but still. So a bit negative, and we'll see that, and I already mentioned it, we will see that negative trend also continue as we go into Q3.

Thank you.

Thank you, Molly. Then we will come back, Linus Larsson, SEB. Linus, what is your second question?

Yeah, thanks a lot for taking a follow-up on COGS, actually. The 90 million that you show in your bridge is, in my mind, a surprisingly low figure. I wonder if you could in any way dissect that. You mentioned currency. How much was that? And you also mentioned the 160 million on cost savings. But apart from that, any way to explain that, in my mind, relatively low figure, please?

Yeah, I mean, you've got some, right? COG savings, we had a positive 160 million. We had a bit of distribution cost, roughly about 100 million negative. We had, I already mentioned, the energy, about 40 million. ROLE MATERIAL WAS ACTUALLY QUITE FLAT VERY NEGATIVE AS I ALREADY EXPLAINED IN TERMS OF PALP AND CONSUMER TISSUE BUT POSITIVE ACTUALLY IN THE OTHER AREA SO FROM A NET PERSPECTIVE NOT A LOT SO AND THEN WE HAD FINALLY A BIT OF INFLATION IN OUR COST GENERALLY SPEAKING SO WE HAD A BIT OF OTHER COGS SO TO SPEAK OF A BIT OVER 100 MILLION SO THAT ADDS UP SO Excellent. Many thanks. Thank you.

Thanks for your follow-up. We will also move back to Aaron Adamski from Goldman Sachs. Aaron, what is your follow-up question?

Yeah, thank you. I was wondering if you could please remind us how does currency translation impact operating leverage? It looks as though FX could become somewhat more favorable later this year, so I was wondering whether that should provide any benefit to central cost leverage. And related to that, could you share how much of your SG&A cost base is denominated in the Swedish Krone? Thank you.

That was a detailed question.

I am now very much looking at Fredrik for that answer.

Yeah, I think you actually said translation, or was it transaction? Because translation should normally not have that much of an impact. From time to time, depending on what currencies move back and forth, it actually does have an impact. And this particular quarter actually had a little bit of impact currency-wise. It's not huge, but a little bit. So translation is typically not the issue. It's more transaction. You're absolutely spot on. If you have a weaker, as an example, weaker SEC, then typically we get a bit of benefit. But to be fair, that's actually all of that is very small. It's not going to be material in our P&L. Thank you very much. Sure.

Thank you, Erin, and thanks, everyone, for your questions. Now it's time to wrap up, but before we end, I hand back over to Ulrika for final remarks.

Well, thank you, Sandra, and thank you, everyone, for joining us this morning and wrapping up the first half of 2026, where we deliver volume-driven sales growth and resilient earnings. And I wish you a very good summer. I hope that you get some vacation, and if you then... If you pass by an airport or you go to the restaurant or you go to a big stadium and have some fun, then I wish you a fantastic TORC experience.

Yes, perfect. Thank you Ulrika and thank you Fredrik. Thanks to our audience for watching. If you have any further questions, you know where to find us. If you would like to schedule a meeting, let us know. With that, enjoy the day, the summer and bye for now.